Here is some generally directional, untied options activity that caught my eye during Thursday’s trading:
1. AMAT – saw opening call buying. When the stock was 24.57 a trader paid .87 for 20,000 Feb 27th weekly 24 calls, and 10,000 of the Feb 27th weekly 24.50 calls were bought for .55 also to open. Total options volume ran more than 6x average daily volume, with calls making up nearly 90% of the volume. Tied for the most active strikes outside the weeklies just detailed were 22,000 of the April 27 calls and 22,000 March 26 calls. These last two look like a roll down from the April 27s to long the March 26 calls. There was also opening buying of the Feb 27th weekly 24.50 calls, with 15,000 trading on the day, most looked like they were bought. This flurry of activity is odd because the company just reported earnings last week and there are no scheduled events in the next week. There are rumors on the web that AMAT’s proposed merger with Tokyo Electron got a boost from Korean officials backing the deal, with a possible closure sooner than expected (currently end of March). My assumption is that traders see an update to guidance that could include hundreds of millions of dollars in cost savings.
2. TSO – has had a wild 2015, down 15% in the first two weeks of the year, then rallying nearly 40% from the lows to new all time highs with an almost 7% decline following Q4 earnings,. And now the stock again making new all time highs! Today when the stock was $91.09 at the highs, a trader sold 27,000 May 70 puts at 1.30 to close, and bought 17,500 May 80 puts for 3.05 to open, likely rolling up protection for a long position. The volatility and relative strength in the refiners is not something I will be able to enlighten you about, way above my pay-grade, but it seems like this investor remains committed to protecting gains as the stock moves his higher:
TSO 6 month chart from Bloomberg
3. RSX – 46,000 of the March 13 puts were bought for .15 when the Russian equity etf was $18. The etf made a panic low of 12.50 back in mid December, but 14 looks like fairly strong near term support. These puts have only a 7 delta, the options market is saying it has less than a 7% chance these puts are in the money on March expiration in a month.
RSX 6 month chart from Bloomberg
4. EWJ – the Japanese equity etf saw some late day call buying when the etf was 12.26 there was an opening buyer of 25,000 March 12.50 calls for .11 and an opening buyer of 19,000 April 12.50 calls for 15 cents. The chart shows the 10% move off of the Jan lows, and for the third time since last summer it’s threatening a technical breakout to new 2 year highs above $12.50:
EWJ 1yr chart from Bloomberg
5. EBAY – when stock was $57.25, a trader sold 10,500 Jan2016 50 puts at 2.50 to open and bought the Jan2016 60/67.50 call spread 10,500x for 2.50, resulting in no cost for the spread. This trade is profitable on Jan2016 expiration between 60 and 67.50 with gains of up to 7.50, with a max gain of 7.50 at 67.50 or higher (up 17.5%). For this size that would be $7.875 million. The position has no gains or losses between 50 and 60, and losses below 50, down about 13%. Prior to Jan2016 expiration this structure will result in losses on a mark to market basis as the stock trades lower towards the short put strike, and gains as trades higher towards the long call strike. The trader is obviously looking to play for a breakout above the 2 1/2 year range and willing to be put the stock at long term support at $50.
