Wednesday’s Notable Options Activity: $AMD, $AVP, $GLD, $INTC, $MU, $OIH, $PEP, $SC, $SPY

by Dan January 7, 2015 4:01 pm • Commentary

Here is some untied, generally directional options activity that caught my eye during Tuesday’s trading:

1. SPY – somebody got their “daytrade” on in front of the Fed Minutes. Earlier in the morning when the SPY was $201.56, a trader paid .23 for 75,000 Feb 215 calls to open, that’s $1.725 million in premium for a break-even up 6.7% in a month and a half.  And just before 3pm, almost an hour after the Minutes were released when the SPY was $201.95, 21,500 of the Feb 215 calls were sold at .26, netting a .03 profit, or about $65,000 before commissions on just that block.

2. OIH – saw a large bearish roll, when the oil service etf was $34.05 a trader sold 20,000 Feb 34 puts at 1.825 to close and bought 30,000 of the April 30 puts for 1.25 to open.  What’s interesting about the OIH is that 2 stocks, SLB & HAL make up 31% of the weight.

3. PEP – saw a bullish roll earlier when the stock was $95, a trader sold 2500 Jan 95 calls at 1.05 to close, sold 3,000 Jan 100 calls at .06 to close and bought 5,000 Feb 100 calls for .65 to open. The company has not set their Q4 report date, but it is expected to be in mid Feb prior to Feb expiration

4. AMD – saw a large bearish put purchase, when stock was $2.56 a trader paid .35 for 100,000 of the July 2.50 puts to open. Break-even is at 2.15, below the 52 week low made on December 12th of 2.35. The stock’s low in 2009 was about $1.90, and again in 2012. AMD’s market cap is $2 billion with $2.2 billion in debt and $938 million in cash with trailing 12 month sales of about $5.5 billion.

5. SC – Santander Consumer is a Texas based lender (I had to look it up). When the stock was 19.50 there was a large bullish roll where a trader sold 28,000 Jan 20 calls at .25 to close and bought 28,000 Feb 20 calls for 1.10 to open

6. AVP – as the stock traded near 20 year lows there was a large bearish roll. When the stock was 8.49 a trader sold to close 11,800 April 9 puts at 1.25 to close and bought 30,000 April 7 puts for .50 to open. Later in the afternoon there was some contrary action to the prior trade, when the stock was 8.44 a trader paid .45 for 25,000 April 10 calls to open. Possibly the same trader legging into a strangle.

7. INTC – when the stock was 35.65, a trader bought the July 28/33 1×2 put spread 12,500 by 25,000 for .53 to open. This trade breaks-even on the downside at 32.47, with max profits of 4.47 at 28, down about 22%. A level the stock has not traded at since last June.  This could be an outright bearish bet or possibly a creative way to add some protection to a long holding with the idea of closing one of the short puts as decay becomes more of an issue closer to expiration.

8. FOXA – saw heavy call volume on the day,despite the stock’s 4% decline, and nearly 9% decline so far in 2015. When the stock was 35.32 a trader paid .75 for 8,000 of the Feb 37 calls to open, total call volume ran 5x average daily.

9. MU – shares closed down 2.5%, below the 7.5% one day implied move following forward revenue guidance that disappointed the street.  Total options volume ran 2.5x average daily volume.  The two largest blocks on the day were call sales, the first being a sale of 11,400 of the Jan 33 calls at .40 when the stock was 32.16 shortly after the opening and then around 2pm a sale of 10,000 Jan 33 calls at .58 to close.

10. GLD – there was a bearish roll from Feb expiration out to April that made one options broker very happy.  When the etf was $116.44., a trader sold the Feb 110/100/90 put butterfly 4,800 by 9,600 by 4,800 at .58 to close and bought the April 110/100/90 put butterfly in the same size for $1.03.  The April trade breaks-even on the downside at $108.97, with a max gain of $8.97 at $100, with profits trailing off to $91.03.  Losses of up to 1.03 between 90 and 91.03 & between 108.97 and 110 with the max loss of 1.03 below 90 and above 110.  In the April put butterfly the trader is risking $494,000 in premium to possibly make up to $4.3 million if the stock is at $100 on April expiration.