Here is some generally directional, untied options activity that caught my eye during Friday’s trading:
1. PFE – total options volume ran more than 2x average daily with calls outnumbering puts almost 3 to 1. There was a large opening call seller. When the stock was $34 69,000 August 35 calls were sold at 65 cents. This was likely an overwrite of long stock where an investor is willing to be called away at $35, but essentially at $35.65, up about 5%. If the stock is 35 or below the investor would receive the 65 in premium and either added 2% to the stock’s yield, or add a 65 cent buffer to the downside. PFE’s dividend yields 3.3%.
2. GM – the stock saw short dated opening call buying when the stock was $35.30 a little more than an hour before the close, a trader paid .455 for 10,000 May 35.50 calls. A quick look at the company’s investors relations page and I don’t see any scheduled events in the next two weeks. The company reported April sales on Friday that were generally better than expected. The only real event I can think of is that Monday at the Ira Sohn investment conference a couple influential hedge fund managers (David Einhorn and David Tepper) who have large stakes in GM will be speaking,
3. AAPL – options volume was nearly 2x average daily on Friday with 20% of the days volume coming in a trade that had no directional inclination or impact on the stock. But it still caught my eye. A trader sold the Jan 120/140 strangle 5,000x at $15 when the stock was just below $126, shortly after the open. If it was opening this could have been an interesting yield enhancement trade for a long holder as the investor would collect $15 between 120 and 140 on Jan expiration, create a $15 buffer to the downside, put the stock at $120. But really $105 when you account for the premium received. Or they have the stock called away at $140, but really $155 when you include the premium received for the strangle sale. And then on the close it looked like there was a a buyer of the June 128/133 1×2 call spread, 11,500 by 23,000 receiving a 6 cent credit. On that trade the buyer can make up to $5.06 between 128 and 133 on June expiration, with profits trailing off from 133 and 138 (with losses above.) This trade could also be a very useful yield enhancement trade to a long stock position. In the first week of June Apple will hold their World Wide Developers conference.