Here is some untied, generally directional options activity that caught my eye during Friday’s trading:
1. VIX – on a day that saw the SPX trade off 1% from the morning highs, call buying in the VIX outnumbered puts nearly 4 to 1. The largest trade on the day was a buy of 50,
2. SMH – after being a massive out-performer in 2014, the semiconductor space is seeing some large cap under-performance in 2015 with INTC down 8%, MU down 17% and QCOM down 11%. On Friday there was a buyer of 30,000 of the SMH (the semiconductor in which INTC makes up about 18% of the weight) March 53 puts in three blocks of 10,000 paying on average $1.15 when the etf was between 54.38 and 54.26.
3. XLU – the utilities etf saw its worst one day decline in four years, down 4%. Options volumes exploded at 21x average daily volume with puts outnumbering calls 209,000 to 19,500 on the day. The two most active strikes were 27,500 of the March 46 puts, and 25,500 of the Feb 47 puts. While a good bit of the Feb and March put activity appeared to be closing prior bearish bets, it also appeared that traders were rolling down their bearish views. For instance when the etf was 47.39, 10,000 of the March 45 puts were sold to close at .48, and 10,000 of the March 43 puts were bought for .19
We are long a March 48/44 put spread (New Trade – $XLU: Utility Playa) that was a slight loser on the opening Friday morning that turned into a nice gainer by the day’s end. We will be sure to update this trade if we get some follow through early this week as I suppose we would look to close and book the gain after such a sharp decline in such a short period of time.
4. TSLA – When the stock was $218 there was an opening buyer of the Jan16 320 / 400 1×2 call spread 1650 by 3300 paying 3.40. This trade is likely an overlay to a long position of 165,000 shares. The trade breaks-even at 323.40, up 48%, with a gains of up to 76.60 between 323.40 and 400, with a max gain of 76,60, if the stock is 400 or higher. This is a fairly classic but not often used yield enhancement / leverage trade. Think of it this way, if the stock was $400 on Jan16 expiration, the investor would have gained $182 from the stock position, but added 76.60, or 35% in yield from the overlay. If this was NOT against stock the trader has defined a wide range to the upside where they can make money between $323.40 and $473.20, with losses above that, which seems like a fairly low probability event, up more than 100% from current levels.
5. BTU – the mining stock was down 70% from the 52 week highs at one point last week, but has since bounced more than 35%. When the stock was $7.83, near the highs of the day a trader paid .25 for 25,000 March 9 calls to open. The company has no scheduled events between now an their Q1 report scheduled in late April.
There was a ton of volatility in shares of tech stocks on Friday following earnings/guidance Thursday night, here were some of the highlights:
6. TWTR – the stock surged 16% on a beat of both the top and bottom line, despite coming in light on monthly active users. Options volume ran a little more than 4x average daily with calls outnumbering puts almost 2.5 to 1. The top 14 most active strikes were all calls, with the most active strike 18,000 of the March 50 calls, most bought to open. I would add that a block of calls that was tied for the largest trade on the day looked to be an opening buy of 2500 March 75 calls for 3 cents when the stock was near the high of the day at $48.40.
7. GPRO – the stock got creamed, down 13% after reporting a better than expected Q4. The sudden resignation of their COO while also faced with a lock-up expiration of 76 million shares of stock on Feb 17th got investors thinking this could be as good as it gets for a while. Total options volume ran 5x average daily volume with calls only slightly outnumbering puts 122,00o to 107,000. The most active call strike was 8,400 of the Feb 27th weekly 47.50 puts, while the Feb 13th weekly 50 calls were the second most active option on the day with 7,000 changing hands.
8. YELP – the generally useless online rating website decline 21% on the day after the company reported a decline in active users, wait for it, as Google is finally making inroads on their ad supported loser-fest. Options volume ran 6x average daily volume, with the March and May 50 calls most active on the day with 2100 and 1500 trading respectively as it appears some traders think the decline was a tad overdone.
9. P – the generally free streaming music service saw its stock decline 17% on Friday, the worst one day drop in two years as the company whiffed on Q4 and guided Q1 lower. Thursday right before the close, and before Pandora’s Q4 report I posted the following in QuickHits on the front page of the site:
The trader closed these puts in lots of 2,000 shortly after the opening, with the first block being sold to close 1.25 when the stock was near the lows at 14.76, with the last of the 5 blocks of 2000 being sold at .67 to close when the stock was 15.34. Whether was protection against a long or an outright bearish play, this buy seemed at tad fortuitous.
10. LNKD – shares of the job related social media site traded at a new intra-day high, but closed a few bucks below the 2013 high after a beat and raise. Total options volume ran 6x average with calls outnumbering puts 1.5 to 1. The largest block of options on the day look to be a sale of 1100 Feb 6th (last Friday expiration) 265 calls that were sold at 3.27 when the stock was near the highs at 268. Looked like a plain and simple defined risk earnings punt that was very well traded.
11. EXPE – shares of the online travel service dropped 11.5% as results and guidance were hit by the negative effects of a strong dollar. Total options volume ran 6x average daily with calls making up 8 of the 10 most active strikes. The largest block on the day was a closing sale of 1450 Feb 80 puts at 2.75 when the stock was 78.31.