Tuesday’s Notable Options Activity: $DD, $GM, $JPM, $MCD. $QLIK

by Dan January 6, 2015 4:09 pm • Commentary

Here is some untied, generally directional options activity that caught my eye during Tuesday’s trading.  One theme that seemed clear among the large blocks of single stocks was rolling out bullish views:

1. MCD – when stock was 93.43 early in the trading session a trader rolled a bullish view, selling 35,000 Jan 95 calls at .90 to close and bought 35,000 Feb 95 calls for 2.27 to open.  The company is confirmed to report their fourth quarter results on Jan 23rd, prior to the market open.

2. DD – when stock was 71.20 a trader rolled a bullish view down and out, selling 28,500 Jan regular expiration 74.50 calls at .16 to close and buying 28,500 Jan 23rd 72 calls for 1.06 to open.  What’s interesting about this roll is that the company has confirmed their q4 earnings will be Jan 27th (here) so the roll does not catch the event.

3. JPM – saw a large call purchase,. When stock was 58.98 a trader paid 1.54 for 56,000 Feb 60 calls, 67,000 traded on the day.  Total options volume was more than 2x average daily volume with calls outnumbering puts about 3 to 1.  This trade represents about $8.6 million in premium, with the break-even on February expiration at a level where the stock was trading at shortly after yesterday’s close.

4. GM – stock saw a huge reversal on the day, up more than 3% from the lows.  When the stock was 35.04 a trader rolled out a bullish view, selling 25,000 Jan 36 calls at .28 to close and bought 15,000 Feb 6th weekly 38 calls for .28 to open. GM is confirmed to report Q4 results Feb 4th prior to the open.

5. QLIK – a $2.7 billion market cap enterprise software company. When the stock was 29.83, a trader sold 2850 Jan 21 calls at 8.75 to close and rolled the winning bullish view out to May buying 12,000 of the May 30/37 call spreads for 2.50 to open. What’s interesting about this trade is that the premium received on the closing position is far greater than the potential gains of the May call spread. So it appears the trader went from having unlimited upside with the Jan position to a slightly more conservative view the second time around

6. CS – European bank stocks continue their nasty year to date decline with the EuroStoxx Bank Index down 5% year to date.  In the afternoon when Credit Suisse was trading 23.81 a trader bought 10,000 of the March 25 calls to open for 75 cents.