Wednesday’s Notable Options Activity: $USO, $AMAT, $INVN, $RAD, $MU, $CBS, $JCP

by Dan April 2, 2015 6:53 am • Commentary• Education

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

1. USO – the etf that tracks the price of wti crude saw continued put buying on a day that saw a 3% gain in the commodity. When the etf was 17.70 a trader bought to open 33,000 of the May 16.50 / 14.50 put spreads for 48 cents.  Later in the afternoon the trader bought another 33,000 of the same spread for about 52 cents.  The trader committed about $3.3 million in premium to this bearish view that breaks-even down about 9% at $16 on May expiration.  The trader can make up to $1.50 or about $10 million between $16 and $14.50 with a max gain of about $10 million at $14.50 or lower.

2. AMAT – saw some way out of the money call buying, but it looks closing. When the stock was $22.40 a buyer paid .32 for 15,000 Jan 32 calls. There was 41,000 open interest in the strike, so the trade is probably closing an overwrite against long stock.

3. INVN – saw opening put buying. When the stock was 15 a trader paid 1.55 for 7,000 of the May 15 puts. The company is expected to report in early May. The implied volatility on that line is already 63 and is likely to climb even higher before the report.

4. RAD – saw some call buying. When the stock was 8.56 a trader bought to open 10,000 April 8.5 calls. Enis wrote about the stock last week and noted some other bullish call buying with nearly 150k open on the April 9 line. The April 9th line also trade heavily yesterday with both buyers and some (possibly closing) sellers. The company is set to report April 8th before the bell.

5. MU – reported Q2 adj. EPS of 81c a share vs. estimates of .73 after Wednesday’s close. Before then there was a lot of positioning in the options market. Most active were May $27 Puts and May $30 Calls and the largest trade was a 7,023 lot of May $27 Puts.

6. CBS – saw some bullish activity. A trader bought 8400 of the June 67.5 calls for 75 cents. More than 11,000 traded on the day. Also, a trader bought 10,000 of the Jan 52.5/65 risk reversals (bullish) for 77 cents. CBS reports earnings on May 7 and the stock is at a very important technical spot after having sold off to its 50 day moving average (and held for now) yesterday:

Screen Shot 2015-04-01 at 8.40.50 PM
CBS 6 month from LiveVol Pro

7. JCP – Financial media seems to have forgotten this story but it certainly looks like options activity is heating up as the stock tries to break out from its recent low range. Over 40,000 calls traded in general (5 times normal) and there was a large print in the Jan’17 4 puts as nearly 10,000 were purchased for .45. Those breakeven at 3.55! (the stock closed at 8.90) Those are more likely some sort of disaster protection against a long that a lotto ticket.