Here is some generally directional, untied options activity that caught my eye during Wednesday’s trading:
1. DIS – The stock continues to make new all time highs, closing yesterday at a new one, now up 12% on the year. Call volume nearly doubled that of puts, and when the stock was 105.53 a trader paid 1.79 for 4,000 of the May 110 calls to open, these calls break-even at 111.79, up 6% on May expiration, which will catch the May 1st release of the latest installment of the Avengers movie. With options prices quickly approaching 52 week lows, defined risk bullish plays with the stock up here seems like a prudent approach as opposed to new long stock positions:
DIS 1yr chart of 30 day at the money IV from Bloomberg
2. GDX – call volume was 6x that of puts, and there was a bullish trade that caught my eye when the Gold miners etf was 20.77, a trader paid .28 for the June 24/27/30 call butterfly. This trade breaks-even at 24.28, with max gain of 2.72 at 27 and losses above 29.72 What’s interesting about this trade structure is that June is an awful long time to own a butterfly, even one as wide and out of the money as this one, but if nothing else the strikes are interesting as the etf for now holds key support at $20, with $24 the breakdown level from September, and $27 very near the highs from August:
GDX 1yr chart from Bloomberg
3. WBAI – here is a stock/company (500.com is an online sports betting/lottery venture in China) that I had never heard of before today. It was down 22% today, and down 42% on the year, and saw massive opening put volume. The stock was down supposedly on rumors on the web that some regulatory agency in China is going to exact some sort of hurt on them. When the stock was $10 a trader apparently sold 50,000 of the March 7.50 puts at .20, at least that was the way they were reported on the floor of the Philadelphia Options Exchange. I am hard pressed to think that anyone would risk selling a .20 put, 50,000 for the max gain of $1 million for the potential loss of $6.5 million if for some reasons the company is put out of business. I have to think that these puts were bought despite them being printed on the bid. Just seems like a poor risk reward for a stock that is already down 80% from its 52 week highs with only 15,000 contracts of options open interest entering the trading day.
4. XLY – the consumer discretionary etf saw a bullish roll when the stock was 76, a trader sold 10,000 March 75 calls at 1.49 to close and bought 20,000 of the April 78 calls for .51 to open
5. LL – The stock declined 26% after issuing disappointing Q4 results and also disclosing that on this Sunday’s 60 Minutes program on CBS the company will be portrayed in an unfavorable light. Total options volume ran more than 10x avg daily volume with call volume equaling that of puts. When the stock was near its lows of the day in the afternoon just above $52 a trader sold to close 500 May 55 puts at 7.90 to close and apparently looked the other way buying 500 May 55 calls to open for 5.50. I described the price action and the options activity last night on CNBC’s Fast Money, watch here:
6. FOXA – a trader bought a bearish risk reversal for even money when the the stock was 35. The buyer paid .55 for 10,000 July 30 puts and sold 10,000 of the July 39 calls at .55 to open, this trade if not a collar of 1 million shares of long stock, would see losses above 39 and gains below 30 on July expiration.
