Friday’s Notable Options Activity: $AAPL, $BUD, $CVX, $IWM, $JPM, $MSI, $TLT, $XOP

by Dan February 2, 2015 7:53 am • Commentary

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

1. AAPL – Total options volume on a day that saw the stock make a new all time intra-day high was 1.3x average daily volume, with calls outnumbering puts 2 to 1.  Calls made up 9 of the top 10 most active strikes, but the only strike in the top ten most active that did not fall in February next week or regulars was the July 130 calls, with 25,000 changing hands vs 45,000 open interest. There was a bullish roll up and out when stock was 117.89 near the lows of the day, a trader sold 4300 Jan30th (Friday expiration) 115 calls at 2.98 and bought 5,000 Feb 6th (next week) 119 calls for 1.21 to open.

2. TLT – the 2o year bond etf continues to make new multi year highs on a daily basis continuing its massive outperformance to stocks over the last year. When the etf was 137.71 in mid afternoon there was a large bearish roll where a trader sold 50,000 Feb 128 puts at .10 to close, and bought 50,000 March 128 puts for .54 to open.  Break-even on these puts is down 7.5% at 128.46 on March expiration, a level it was trading at the start of the year but seems like a ways off now.  Last week I closed for a loss what seems to be a very crowded trade on the short side in TLT (read here).

3. XOP – on a day that saw a massive short term reversal in crude oil, the S&P Oil & Gas E&P etf saw a decent size bearish roll, when the etf was 44.54 a trader sold 10,000 Feb 47 puts at 3.35 to close and bought 17,000 Feb 44 puts for 1.92 to open.  Total options volume ran 2x average daily with puts outnumbering calls 2 to 1.

4. IWM – there was a fairly massive put butterfly bought in the small cap etf was the stock was 116.92, trader paid 1.37 for the May 95/100/110 put butterfly, 42,000 by 84,000 by 42,000, to open. This trade breaks even on the downside at 108.63, with max gain of 8.63 at 100 on May expiration. Loss of 1.37 below 95 and above 110.  There was also a large bearish roll when the etf was 116.92, a trader sold 38,000 March 112 puts at 2.08 to close and bought 38,000 March 110 puts for .47 to open

5. MSI – There was a bullish risk reversal bought in the stock when it was 63, a trader sold 3000 July 60 puts at 2.35 and paid 2.15 for 3000 July 67.50 calls to open, this trade breaks even on the upside at 67.30, and worst case trader is put 300,000 shares at 60, less the .20 credit received, between 60 and 67.50 trader receives 20 cent credit.

6. JPM – on a day that saw the stock close at the lows of 2015, down 13% on the year, and down nearly 15% from the 52 week highs made on Dec 31st, the stock saw some long dated call buying, trader paid up to 4.65 for 5,000 of the Jan2017 60 calls to open when stock was $55.

7. CVX – Despite the earnings beat the stock was down about 4% after news that the company would suspend share buybacks given the collapse in crude, but closed down marginally in sympathy with the huge bounce in crude oil.  When the stock was 102.02 it saw a bearish roll where a trader sold 2000 Feb 103 puts at 4.05 to close, and bought the March 95/85 put spread 2000x for 1.65.  The one year chart is quite interesting as it has not for a second threatened the downtrend that has been in place from the summer highs near $135, but Friday might have made a near term double bottom on massive volume:

CVX 1yr chart from Bloomberg
CVX 1yr chart from Bloomberg

8. BUD – saw huge call volume, with 40,000 trading on the day, greater than the 30,600 total open interest in the stock coming into the day.  When the stock was 120.91, a trader paid 2.50 for 15,000 Jan16 150 calls to open vs selling 210,000 shares.  These calls were only a 14 delta, so the buyer might have traded the options vs stock to secure better pricing from the market maker.  Later in the afternoon another 10,000 were bought, also for 2.50 to open, 33,600 ended up trading on the day making it the single largest line of open interest.  This is a fairly curious purchase with break-even a year out of $152.50, up about 26% from current levels, with the stock just 1% from all time highs on a runaway breakout:

BUD 1yr chart from Bloomberg
BUD 1yr chart from Bloomberg