Here is some generally directional, untied options activity that caught my eye during Monday’s trading:
1. MCD’s – the new CEO laid out his plane to turnaround falling sales in this 23 minute video, be prepared to be underwhelmed: https://mcdonalds.webcasts.com/viewer/event.jsp?ei=1063465 The stock closed down a little less than 2%, and options volume ran 3x average daily with call volume outnumbering puts 2 to 1. Shortly after the news was out, traders started peeling out of prior bullish bets, when the stock was 97.13 a trader sold to close 5,000 of the May 100/105 call spreads at 48 cents. Late last week we detailed the potential for holders of stock to generate yield by selling short dated options against their stock (here and here). With the news out, short dated implied vol came in very hard, as expected, and the May8th weekly 95 / 100 strangle that was around $2 on Friday’s close when the stock was $97.80, and went out offered yesterday at 65 cents with the stock down $1.60 at $96.13.
MCD 6 month chart of 30 day at the money implied vol from Bloomberg
2. GOOG – saw a roll down in Sept calls when the stock was $539.77, a trader sold to close 2500 Sept 575 calls at 14, and bought to open 2500 Sept 535 calls for 31. The stock has given back all of its post earnings gains, down 5% from the April 24th one month highs.
3. APC – saw a bullish call spread risk reversal, when the stock was $93.52 a trader sold to open 5,000 June 87.50 puts at 1.74 to buy 5,000 of the June 100/110 call spreads for 1.29 resulting in a .45 credit for the package.Worst case the trader is put 500,000 shares at 87.50 on June expiration (less 45 credit or $225,000). Between 87.50 and 100 receive the 45 cents, long above 100, with max gain of 10.45 up to 110.
4. XOP – the energy etf saw a roll up in June puts when the stock was $55.12. a trader sold to close 25,000 June 48 puts at .60 and bought to open 25,000 June 52 puts for 1.57
5. HAL – shares of the oil driller are approaching a huge breakdown level from last fall at $50, with the stock up 33% from the 52 week lows, and up 25% on the year:
HAL 1yr chart from Bloomberg
When the stock was $49 at 11am yesterday a trader paid 1.62 for 50,000 of the June 50 calls to open. Break-even on this trade is up at $51.62, up about 5%. If the stock is below $50 in less than 6 weeks the trader would lose $8.1 million in premium. The only scheduled event I can see from the company’s investors relations site is their annual shareholders meeting on May 20th where maybe some expect to get some news on their previously announced acquisition of Baker Hughes.
