Monday’s Notable Options Activity: $YHOO, $PBR, $VALE, $RSX, $HIG, $GM

by Enis September 9, 2014 6:49 am • Commentary

Commodity stocks were active as the entire commodity complex got hit hard yesterday as the U.S. dollar made new 1 year highs vs. a number of currencies.  YHOO was also very active after the initial Alibaba pricing indication.

1.  YHOO – The $60 – $66 pricing range for Alibaba indicated for the Sept 18th IPO was at the high end of what investors were expecting based on YHOO’s enthusiastic price action on Monday.  The stock rose 5.5% on its highest volume in the past year, touching a new 52 week high.  Options traded more than 4x the 1 month average.  The Oct 50 calls were the most active line, trading over 30k at an average price of $0.61.  The Oct 45 calls also traded over 20k.

Matt Levine had a good article yesterday evening discussing the details of the IPO process, and the various incentives of bankers and investors on the pricing of the deal.  Kid Dynamite also had a good post yesterday, pointing out that the planned $21 billion of stock for sale in the Alibaba deal is the largest IPO in U.S. history, and could weigh on the broader market in the near-term.

2.  PBR – After touching its highest level in nearly 2 years last week, PBR has declined 10% since Sept 2nd, including 5.3% yesterday.  The Nov 16/19 risk reversal traded 40k on the session, looks like the trader selling the Nov 16 put to buy the Nov 19 call.  40k of the Nov 16 puts traded at an average price of $0.74, and 40k of the Nov 19 calls traded for an average price of $1.50.

3.  VALE – Buyer of 10k of the Jan15 13 calls for 0.54 in the morning.  Over 19k in total traded on that line at an average price of 0.53, mostly the same buyer.  VALE is trading near a 5 year low, but has found some buyers around the March low of $12.29.  The stock is down 18% year-to-date.

4.  RSX – Buyer of 10k of the Jan15 26 calls for 1.075 to open in the morning when RSX was trading $25.00.  The buyer bought another 8,800 for $1.05 shortly afterwards.  RSX has not traded above $26 since mid-July.

5.  HIG – Seller of 26k of the Oct 36 calls at 1.22 to open in the afternoon.  Likely a call overwrite against a long stock position.  HIG does not report earnings until late October, after the Oct18th expiration.

6.  GM – Calls traded 3x the average one month volume even as GM declined around 3% on its highest volume in more than a month.  The Oct 35 calls traded 15k at 0.34 at the same time that the Oct 34 calls traded 10k at 0.665, both around noon.