Thursday’s Notable Options Activity: $CHK, $CONN, $SMH, $TLT, $XLF

by Dan April 17, 2015 7:52 am • Commentary

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

1. CHK – On Wednesday we saw crazy short dated call buying in UAL (here), and yesterday we see a considerably larger, much longer dated, but also 50% out of the money break-even in CHK.  When the stock was $15.88 a trader paid 6 cents for 50,000 Jan 30 calls to open, the stock traded 30 in July of last year, which was also a 3 year high before it was cut in half.  This trade represents $300,000 in premium with a very low probability of being in the money on January expiration, but that doesn’t move a 10 to 20% rally from current levels would cause these options to be a very quick double, but I suspect that is not why the trader bought this block of options.  Likely leverage to a long. Here is a situation where time is very much on the trader’s side.

2. CONN – Wednesday say short dated call buying in the electronics retailer:

CONN – After closing down nearly 75% in 2014, the beleaguered electronics retailer’s stock is now up 75% in 2015, but still down about 60% from the all time highs. When the stock was 33.26 yesterday at trader paid 1.25 for 2500 of the July 40 / 45 call spreads to open.  This trade breaks-even at $41.25 on July expiration, and has a max payout of 3.75 if the stock is 45 or higher.

Yesterday brought longer dated, nearer the money call buying, with 3,000 July 33 calls bought to open.

3. SMH – saw put buying, when the semi etf was 56 a trader paid .90 for 35,000 May 55 puts to open.  57,000 puts traded on the day vs 180 calls.

4. XLF – saw a large bearish roll out in time when the financials etf was 24.46, a trader sold to close 73,000 June 21 puts at .06 and bought to open 73,000 July 21 puts for .12

5. TLT – saw a bearish roll up when the 30 yr bond etf was 130, a trader sold to close 10,000 May 127 puts at .90 and bought to open 10,000 May 128 puts for 1.26