Here is some generally directional, untied options activity that caught my eye during Wednesday’s trading:
1. DE – the stock closed up 3.15% the day after it was disclosed that Warren Buffett’s Berkshire Hathaway more than doubled its stake in the farm machinery maker. Total options volume ran more than 2x average daily volume, with the most active strike 2800 of the March 95 calls. These calls closed today at 1.14, and closed yesterday prior to the 3% move in the stock at 42 cents. I described the action last night on CNBC’s Fast Money:
DE reports their fiscal Q1 results Friday morning before the open. The options market is implying about a 2.5% one day move, which is rich to the 4 qtr avg move of only 1.5%. I suspect at this point the increased involvement by Berkshire should offer some sort of downside support for the stock in the near term, with some traders looking for a re-test of the all time highs at $100:
2. OIH – On a day that saw oil decline more than 2%, the Market Vectors Oil Service etf saw what appeared to be bearish flow with a closing seller of 5,000 April 40 calls at .575 when the etf was $36.75. 10,000 ended up trading on the day making it the most active option in the name. There was also some opening put buying, when the etf was 36.60 a trader paid .19 for 2000 Feb 36 puts for .19 and bought 2000 Feb 36.50 puts for .33 to open, both expire this Friday. SLB and HAL make up 30% of the weight of the etf.
3. IYR – the iShares US Real Estate etf saw heavy options volume yesterday with puts making up 90% of the volume. The largest trade of the day was a buy of 23,000 June 80 puts for 3.25 to open when the etf was $80.
4. JCP – total options volume ran 2.5x average daily volume with calls outnumbering puts nearly three to one. The most active strikes on the day were 11,000 Feb 8.50 calls, and 10,500 Feb 8 calls both expiring Friday afternoon. The company is not scheduled to report earnings until next Thursday after the close. Today the stock made a new 4 month high before settling back below its 200 day moving average. With 33% short interest the stock is prone to squeezes, but buyers of these calls are expecting movement this week. The one year chart is fairly constructive, and the early January gap on their better than expected Holiday sales update could serve as a guide for a beat and raise next week:
5. FAST – The construction supplier saw unusual call activity, with total call volume 20x avg daily. When the stock was 43.12 there was an opening buyer of 6500 March 45 calls for 55 cents. The bullish positioning with the stock down 10% on the year, appears to come a couple weeks before their monthly sales report due March 4th, and a management presentation at an industry conference on March 5th.