Friday’s Notable Options Activity: $XLE, $AMLP, $LINE, $DO, $HLF, $SLB

by Enis December 1, 2014 6:26 am • Commentary

The energy sector was the most active in the options market on Friday after the huge drop in oil prices last week (around 13%).

1.  XLE – XLE declined over 6% for the first time since August 2011.  Total volume was over 40 million shares even though Friday was only a half-day session.  One trader rolled the Dec5th 83 puts down to the Jan15 75 puts.  The Dec5th 83 puts traded over 120k at an average price of 3.05, and the Jan15 75 puts traded over 110k at an average price of 1.33.  XLE has not traded below $75 since April 2013.

2.  AMLP – The MLP ETF declined 3.5% on Friday, but actually remains positive on the year, in contrast to most energy-related sub-sectors.  Buyer of over 30k of the Jan15 17 puts for an average price of 0.345 throughout the morning.  AMLP’s low in October was $16.63.

3.  LINE – LINE made a new 5 year closing low on Friday, ending the day down 16%.  The April 23 / 17 1×2 put spread traded 8,500 x 17,000 in the morning at $1.80, in what looks like a trader rolling down puts from the 23 strike to the 17 strike.

4.  DO – Diamond Offshore closed at a new 10 year low on Friday.  The Jan15 29 / 26.75 put spread traded 10,900 times for 1.05.  DO is down 45% year-to-date.

5. SLB – The stock made fresh 52 week intra-day lows before closing near the highs of the day, but still closing down 7.4%.  Total options volume ran 3x average daily, with Dec 82 and 90 puts most active. When the stock was $86.43 a trader apparently rolled down near term protection or an outright bearish bet by selling 7,000 of the Dec 90 puts at 5.40 to close and buying 8,000 of the Dec 82 puts to open for 1.35.

6..  HLF – Herbalife shares have rebounded in the past 2 weeks after making a new 18 month low of $36.97 on November 12th.  10,500 of the Jan15 50 puts traded at 8.80 on Friday.  That strike still has over 60k of open interest with 1.5 months until expiration.

7. FCX –  shares closed at new 52 week, and nearly new five year lows. When the stock was $26.84 it looked a like a roll down an out of the money bullish play where a trader sold 9,000 Jan 30 calls at .24 to close and bought 9,000 Jan 29 calls to open for 44 cents.