Monday’s Notable Options Activity: $AAPL, $COV, $XLI, $JCP, $RICE

by Enis October 21, 2014 8:11 am • Commentary

Options activity was bullishly skewed for the first time in several weeks.  The CBOE composite put/call ratio closed at 0.87, its lowest level since late September.  SPY calls traded nearly as actively as puts, a major change in character compared to the the past 2 weeks (when the put/call ratio was around 2).

1.  AAPL – Calls traded over 1 million on the session ahead of earnings.  The call to put ratio closed at around 2.25.  The Nov22nd 105 call was the most active line, trading over 60k on the session.  AAPL is trading up 2% in the pre-market after yesterday’s strong report.

2.  COV – Buyer of 40k of the Jan15 75 / 57.5 put spread for 3.55 in the afternoon.  COV has not traded below $75 since its gap higher in June after Medtronic announced its intention to acquire the company.  The put spread was likely bought by a risk arbitrage player who is long COV and is hedging a potential break of the deal over the next 3 months.

3.  XLI – Trader bought a collar in XLI, buying 50k of the Dec 48 puts vs. selling 50k of the Dec 54 calls, paying 0.40 for the collar.  XLI has not traded below $48 since October 2013, while the high of the year in XLI is $55.82 from June.

4.  JCP – Seller in the morning of around 20k of the Jan15 9 puts at an average price of 2.02, likely to close.  JCP has declined more than 30% from its mid-Spetember high of $11.30.

5.  RICE – Buyer of 12,500 of Jan15 25 calls for 2.20 to sell 15,000 of the Jan15 30 calls at 0.60.  RICE is a $3.5 billion energy exploration company that IPO’ed in January.