Tuesday’s Notable Options Activity: $DXJ, $TWC, $YHOO, $MRK, $KORS, $HTZ

by Enis November 12, 2014 6:45 am • Commentary

The S&P 500 index yesterday had its tightest range and lowest volume since the last week of August.  The bond market holiday for Veterans’ Day certainly contributed to the quiet session.

1.  DXJ – Large call purchase to open when etf was 54.28.  Buyer paid 0.60 for 49,000 of the Nov 55 calls.  That trade breaks even above 56.10, which is up 3.3% over the next week and a half.  DXJ has not traded above $56 since 2007.

2.  TWC – Fears that CMCSA will pull its bid for TWC has hit the stock in the past two sessions.  There was a buyer of 16k of the April 125 puts for around 10.20 to sell 28k of the April 95 puts at around 2.00.  This trade structure is nearly a 1×2 put spread in TWC that offers downside protection, likely by someone long TWC and worried about the CMCSA bid being pulled.

3.  YHOO – YHOO is up more than 30% since the mid-Oct low, and is up 21% year-to-date, benefitting from the recent rally in BABA.  Calls were active yesterday.  The largest block trade was a buy of 18,000 of the Nov22nd 51 calls for 0.26 to open when the stock was 48.90.

4.  MRK – MRK quickly bounced back from Monday’s lows on the disappointing data for its Hepatitis C drug.  The Nov22nd 60 calls traded over 40k yesterday at an average price of $0.59.  MRK’s high of the year is $61.33.

5.  KORS – KORS hit a new 52 week low yesterday, though one options trader remains bullish.  There was a roll-down in calls when the stock was $68.8.  Trader sold 14,000 of the Jan 2016 90 calls at 3.07 to close, and bought 9,000 of the Jan 2016 75 calls for 7.25 to open.

6.  HTZ – A bearish roll in puts when the stock was 22.42.  Trader sold 16,000 of the Nov22nd 21 puts at .60 to close, and bought 16,000 of the Dec 21 puts for 1.30 to open, likely a hedge against long stock.