Friday’s Notable Options Activity: $BABA, $VMW, $EMC, $TWTR, $HYG, $PBR, $SWN, $HRB

by Enis October 6, 2014 6:20 am • Commentary

The S&P 500 index had its first rally of over 1% on Friday since August 8th. Options volumes were concentrated in the tech sector, with calls more active than puts.

1. BABA – First week of options trading in BABA ended on a busy note. The Oct18th 90 calls traded over 28k on the session at an average price of 1.805. BABA has traded in a range of $86.50 to $91.50 since the more volatile first day of trading on the IPO. 30 day implied volatility closed the week at 34.

2. VMW – Bullish call rolls in both VMW and EMC. In VMW, when the stock was 94.18, a trader sold 10,000 of the Jan15 105 calls at 2.63 to close and bought 10,000 of the April 105 calls for 4.83 to open. VMW last traded above $105 in April.

3.  EMC – When the stock was 28.70, a trader sold 40,000 of the Jan15 31 calls at .70 to close, and bought 40,000 of the April 31 calls for 1.13 to open. Dan laid out the situation in EMC in a MorningWord post 2 weeks ago, after news that Elliott had taken an activist stake in the stock.  The stock’s high for the year is $30.18.

4.  TWTR – TWTR broke out to a new 6 month high on Friday after consolidating around $50 for much of September. Options traded about 2x the average 1 month volume, with 1 or 2 week calls making up the top 7 most traded lines. Dan discussed his plan for his TWTR long stock position in a Name That Trade post on Thursday.

5.  HYG – Lots of bullish flow in HYG in the mornig. One trader bought 40,000 of the Oct18th 92.50 calls for .40 to open. There was also a seller of 3,750 of the Nov 88/91 put spread to buy 3,750 Nov 93 calls, paying 0.125 for the package. HYG has traded between $90.89 and $95.43 for the past year.

6.  PBR – Buyer of 64k of the Nov 20/22 call spread for 0.195 in the afternoon. 30 day implied volatility in PBR closed the week at 94, incredibly high for a nearly $100 billion market cap company. The stock is up 11% in the pre-market after yesterday’s elections resulted in a runoff between Dilma Rousseff and Aecio Neves that will take place later this month (Neves coming in second over Silva was the positive surprise from traders’ perspective).

7.  SWN – The stock is down nearly 30% since the April high as the entire energy sector continues to struggle. However, buyer of 20k of the Nov 38 calls for 0.45 to open. SWN reports earnings on Oct 23rd after the close.

8. HRB – Buyer of 15k of the Jan15 32 calls for 1.40 in the morning. HRB made an all-time high of $33.92 in August.