Here is some generally directional, untied options activity that caught my eye during Friday’s trading:
1. BABA – traders have been eyeing the March low of $80 as technical support, a level it held in mid March following the lock-up expiration of more than 350 million shares. Earlier in the week much of the flow seemed bullish, from Monday:
BABA saw bullish flow yesterday as calls outnumbered puts more than 4 to 1. When the stock was just $85.34 a trader paid 1.00 for 10,000 of the May 90/95 call spreads, this spread breaks even at 91 with a max gain of 4 if stock 95 or higher on May expiration.
By Friday though, with the stock $82.78 a trader rolled a bearish view, selling the April 82.50 / 80 1×2 put spread 2500 by 5,000 to close, and rolling out and down to 3500 by 5,000 of the June 80/75 put spreads for .43 to open.
2. SWFT – on April 1st we highlighted some outright put buying from the previous day in the transportation logistics company that represented almost half of the current open interest in the stock:
SWFT – minutes before the close 15,000 of the November 23 puts were bought to open for 1.70 when the stock was $26.05. Today’s volume was more than the existing open interest in the stock coming into the day.
On Friday when the stock was $25.27 a trader paid $4.25 for 10,000 of the Aug 25 Straddle. The buyer of the straddle needs a move above $29.25, or below $20.75 to break-even on August expiration. Clearly at least one trader is expecting movement in the coming months, this for a stock that has traded in a range of $5 back in 2011 and nearly as high as $30 last month.
3. CSX – after reporting Q1 results and forward guidance not as bad as some feared after the disappointment Wednesday from Norfolk Southern, and with the announcement of an additional $2 billion share repurchase, calls were active on Friday, 9x average daily, and 7x that of puts. When the stock was $33.20 a trader paid .50 for 10,000 of the May 34 calls to open, 27,000 ended up trading on the day. Also shortly before the close when the stock was 33.22 a trader paid .35 for 8,000 of the May 35 calls. The company is holding its annual shareholder meeting on May 6th, and management will be speaking at Merrill Lynch’s Transportation conference on May 14th.
4. C – On Friday the stock reversed all of Thursday’s gains and filled in the entire gap. Shortly after the open when the stock was $54 a trader paid 8 cents for 25,000 May 47 puts to open. While this is not a ton of premium for a large institution, $200,000, it is likely a hedge against a long stock position as the break-even is about $1 above the 52 week lows.