Here is some generally directional, untied options activity that caught my eye during Wednesday’s trading:
1. TWTR – options volume exploded for the second straight day, the first full trading session investors had to digest the horrid Q1 results, sending the shares down 9%, after the prior days 18% decline. Total options volume was 5x average daily volume, with calls outnumbering puts 400,000 to 300,000. The two most active contracts on the day were 21,000 0f the May 1st weekly puts and 18,000 of the May 1st weekly calls. One trade that caught my eye when the stock was about $40 a trader paid 2.75 for 3500 of the Sept 42 / 52.50 call spread to open vs selling stock on a 29 delta. This could have been stock replacement as a trader is defining their risk for a move back to the recent highs by Sept expiration.
2. FDX – the stock has been in a downtrend since making all time highs in early December, making a series of lower highs, holding the uptrend that has been in place for the last year, while $170 has appeared to be a magnet during its consolidation over the last 5 months:
Yesterday when the stock was $169.75 a trader paid $9.10 for 2,000 of the June 170 straddle to open. This trader is looking for movement in the stock above $179.10, or below $160.90 by June expiration. The company is scheduled to report fiscal Q4 results two days prior to June expiration. I would also add that while $9.10, or about 5% seems expensive in dollar terms, in vol terms options prices are relative inexpensive as 30 day at the money implied volatility is approaching 52 week lows:
