Wednesday’s Notable Options Activity: $BABA, $TOL, $PHM, $ARCP, $ATML, $HTZ

by Enis October 30, 2014 7:00 am • Commentary

Very light options volumes once again, even as stock volumes picked up in the afternoon after the Fed release.  The CBOE composite put/call ratio closed just above 1 on the day.

1.  BABA – Alibaba has its first earnings report next week, on the morning of Nov. 4th.  Dan discussed the large collar that traded in BABA yesterday morning in a NTT post:

The options structure was crossed on the Philadelphia Options Exchange at 11:06 AM and was traded delta neutral, meaning tied to buying 500,000 shares of BABA at $98. Here are the strikes:

-Sold to open 10,000 Nov 22nd regular 110 calls at $1.35 and

-Bought to open 10,000 Nov 7th weekly 94 puts for $2.40

The structure cost $1.05

That is an unusual protection structure since the call and put strikes are different expirations.  See the full post for more details.

2.  TOL – Looks like a roll, as a trader sold around 34k of the Dec 36 calls at 0.15 to buy 25k of the Jan15 34 calls for 0.825.  TOL’s next earnings report is going to be in mid-December, and the stock has not closed above $34 since the early September report.

3.  PHM – Another homebuilder that saw unusual activity.  The Nov22nd 19.5 calls traded over 13k at an average price of 0.47, mostly buyer initiated.  The break-even on that trade is $19.97, which PHM hasn’t touched since July.

4.  ARCP – ARCP fell 19% after disclosure of accounting errors that were intentionally hidden.  The Jan15 10, 12.5, and 11 calls all traded over 10k on the session, mostly buyer initiated throughout the session.  30 day implied volatility jumped to 85.

5.  ATML – Buyer of over 15k of the Jan15 8 puts to open for an average price of 1.24 in the morning.  ATML is down 7.5% year-to-date and hit a 52 week low of $6.32 in mid-October.

6.  HTZ – Buyer of the weekly 22 puts, which traded over 12k at an average price of 0.41 on the day.  It’s curious that the put buyer would focus on weekly options with no announced catalysts over the next 2 days.