Thursday’s Notable Options Activity: $DOW, $NEM, $CSCO, $AAL, $QCOM

by Enis November 7, 2014 6:55 am • Commentary

Options volumes were light once again for single stocks, with earnings season gradually winding down.  The CBOE composite put/call ratio closed at 0.91.

1.  DOW – The Jan15 57.5 calls traded 31,250 for 0.38 at the same time that 20k of the Jan15 47 puts traded at 1.48.  Possible risk reversal or collar in the stock.  DOW has remained below the $50 resistance level since its break-down in early october, though yesterday’s close was its highest of the past few weeks.

2.  NEM – Looks like a trader rolled down a put spread for protection.  The March 21/19 put spread traded 18k at 1.36 at the same time that the March 17 puts traded 18k for 1.05 vs. the March 15 puts trading 27k at 0.44, which looks like a ratio put spread to open.  In other words, a trader took off the higher strike put spread for a profit and rolled into a ratio put spread with lower strikes for less premium.  NEM hit a 10 year low this week.

3.  CSCO – CSCO reports earnings on Nov. 12th after the close.  Buyer of the Nov22nd 24 puts, which traded over 26k at an average price of 0.26.  The implied move on earnings is around 4%.

4.  AAL – American Airlines has rallied back up to near its high of the year, which is $44.88 from June.  Buyer of the Jan15 40 / 50 collar, buying the Jan15 40 puts around 22k times for an average price of 1.83 vs. selling the Jan15 50 calls around 22k times at an average price of 0.90.

5.  QCOM – QCOM ended down 8.5% after its weak earnings report, on its highest single volume day since 2010.  The Jan15 70 call was the most active line, trading over 18k at an average price of 2.09.  We discussed possible trades in QCOM in yesterday’s NTT post.