Wednesday’s Notable Options Activity: $YHOO, $GLW, $LUV, $DOW, $HYG

by Enis October 23, 2014 7:26 am • Commentary

Realized volatility remains elevated in the S&P 500 index, as it has moved more than 0.5% in either direction on 10 of the last 12 days.

1.  YHOO – YHOO gapped higher after a strong earnings report, and options volumes were nearly 2x the 1 month average.  Buyer of 10k of the Jan15 45 / 50 call spread for 1.13 in the morning.  YHOO’s 10 year high is $44 from September.  The stock has not traded above $45 since October 2000.

2.  GLW – Saw some call buying yesterday.  Trader paid 0.88 for 10,000 of the Jan15 22 calls, when stock was 18.63.  That could be buying to close as there is 34,000 open interest in the strike.  GLW has fallen nearly 20% from its July high of $22.37.

3.  LUV – Buyer of 12k of the Nov 37 / 39 call spreads for $0.47 throughout the session.  LUV has had an incredible run in the past year, on track to advance for the 14th straight month, nearly tripling in that period.  The stock’s all-time high is $35.49 from September.  The stock beat earnings this morning, so it might test that high.

4.  DOW – DOW reversed lower after a large gap up on earnings, getting rejected at the critical $50 resistance level in the morning.  Interesting 3-way trade, looks like profit taking combined with a roll.  Trader took off 20k of the Nov 43 / 49 risk reversals, buying back put to close, and selling call to close, collecting a $1.48 credit.  That trade was put on October 16th for around even.  The trader looks to have taken $1.08 of that profit to buy 20k of the Nov 51 calls, leaving a bullish position in DOW, but with limited risk, and a profit of $0.40 in the pocket.

5.  HYG – HYG reversed after 6 straight days in the green.  The Nov 93 calls and the Dec 92 calls both traded over 10k on the session.