Thursday’s Notable Options Activity: $IWM, $FXI, $XOP, $PBR, $RIG, $GME, $GGP, $AFSI, $X

by Enis October 3, 2014 6:35 am • Commentary

Macro ETFs dominated options volumes as intraday volatility has heated up in the past week.  Outside of ETFs, commodity-related names were the most active.

1.  IWM – IWM reversed after touching its lowest level of 2014.  Options traded nearly 2x the 1 month average, with the Oct18th 108 puts and the Nov22nd 100 puts the most active lines, both trading over 45k on the session.  The $107 level is important support, while $110 is resistance on the upside.

2.  FXI – Puts were very active again (2.5x 1 month average) as investors looked to protect against further turmoil in Hong Kong.  The Oct18th 36 put line was most active, trading over 40k at an average price of 0.40.  FXI 30 day implied volatility hit its highest level in 6 months.

3.  XOP – The energy sector has been walloped since July.  Both XLE and XOP registered their highest volume of the year on yesterday’s reversal, though both still closed in the red.  One trader rolled a long put position, selling 15k of the Nov 67 puts around 4.50 to buy 30k of the Nov 62 puts for 2.25, premium neutral on the roll.  XOP has not traded below $62 since August 2013.

4.  PBR – Petrobras has been decimated in the past month.  The stock is down over 35% since its failed breakout that I noticed in a CotD post on Sept 9th.  Calls were very active yesterday, trading nearly 3x as actively as puts.  The Nov/Dec 16 call calendar traded 20k times for 0.08, in what looks like a trader rolling a long call position out one month.

5.  RIG – The stock had its highest volume since October 2013 and reversed higher.  Another put roll – trader sold to close 5k of the Jan15 36 puts at 6.60 to buy 20k of the May 26 puts for 1.65, which is premium neutral.  RIG is now down 36% year-to-date.  For more details on the bull vs. bear arguments in the offshore drilling sector, see my post on ESV from last week.

6.  GME – Big put roll:  someone sold 20k of the Oct 38 puts at 0.58 to close, and sold 6,370 of the Oct 40 puts at 1.39 to close, and sold 6370 of the Oct 41 puts at 1.93 to close, to buy 16,370 of the Jan15 36 puts for 2.07 to open, and to buy 16,370 of the Jan15 37 puts for 2.45 to open.  The put buyer had initially bought the Oct puts in mid-July.  This trade adds a significant amount of new premium to the position though.  We were bullish on GME into the Aug earnings report, but I sold my stock position a few weeks ago for a profit as the holiday season for video games looks less appealing than last year.

7.  GGP – Buyer of 20k of the Jan15 21 puts for 0.434 to open.  GGP is up 16% year-to-date, and has not traded below $21 since February.

8.  AFSI – Second straight day that the same put spread traded in Amtrust.  Buyer of 10k of the Jan15 42.5 / 27.5 put spread for $5.25, after trading 10k on Wednesday as well, buyer to open.  AFSI is up 22% year-to-date.

9.  X – X has been very volatile since July, rallying from the mid-20s to a high of $46.55 two weeks ago, and touching a low of $35.20 yesterday.  Yet another put roll:  trader sold 5,200 of the Jan15 38 puts at 5.00 to close and bought 6,200 of the Nov 35 puts for 2.45 to open.