Friday’s Notable Options Activity: $IWM, $FXI, $VIX, $HLF, $EBAY, $RIG

by Enis September 22, 2014 6:44 am • Commentary

Small caps and China have been weak in the past few days, and options volumes on Friday reflected those concerns among traders.

1.  IWM – Buyer of 50k of the Oct18th 111 puts for 1.06 midday.  Separately, aggressive buyer of the Oct31st 113 puts throughout the day.  That line traded over 50k at an average price of 2.17.  IWM puts traded over 850k on Friday’s session, compared to a 1 month average of 350k. $110 is the critical support level to watch for IWM in the coming weeks.

2.  FXI – Buyer of 40k of the Oct3rd 37.5 puts for 0.10 to open around noon.  Considering that FXI has not traded below 37.50 since mid-July, that’s an interesting strike to purchase with just 2 weeks to expiration.  FXI closed 2013 at $38.37.

3.  VIX – The Oct 16 calls traded 180k for 0.77, and the Nov 20 calls traded 180k at 0.83, both in the morning.  The trade could be a call diagonal or a roll.  VIX spot has not touched 20 since February.

4.  HLF – Looks like a roll in Jan15, as a trader sold 15k of the Jan15 65 puts at 21.30 to close, to buy 40k of the Jan15 40 puts for 4.35 to open.  This roll resulted in a net credit to the trader of $14,550,000.  The trader was likely Mr. Ackman, though it’s interesting that the trader essentially took some premium off the table, but remained in Jan15 expiration as opposed to the Jan15 to Jan16 roll that was executed last month, which led to a premium outlay of more than $20 million.  HLF closed at a new 52 week low.  The stock has not touched $40 since May 2013.

5.  EBAY – Calls were active, with the biggest trade likely a roll from Oct to Nov.  The Oct18th 52.5 calls traded nearly 20k at an average price of 1.94 midday, and the Nov 55 calls traded 20k for 1.46 at the same time as 12k of the Oct print.  EBAY’s next earnings report is on Oct 15.

6.  RIG – The deepwater drillers have been under pressure since June, when oil prices rolled over, and RIG hit its lowest level since early 2004 on Friday.  Puts were active, with the Nov 33 puts traded over 20k at an average price 1.085 throughout the session.