Big Printin’: $T, $JCP, $JD, $WMT, $XLF

by Dan June 23, 2015 4:38 pm • Commentary

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

1. T – total options volume was more than 3x average daily volume with calls making 75% of the volume.  The largest single stock options trade was in T today as the stock was up nearly 3% on two sell side upgrades. When the stock was $35.91 a trader bought to open 42,000 Aug 36 calls for .64, and shortly after bought another 25,000 of the same calls for 70 cents, a total of 88,000 traded on the day.  The stock broke out to new 2015 highs, up 7.5% on the year, not bad for a stock that has a dividend yield north of 5%:

T 1yr chart from Bloomberg
T 1yr chart from Bloomberg

2. JCP – the beleaguered retailer has seen its shares gain 36% in 2015, but still down 22% from the 52 week highs made last Fall.  Today when the stock was $8.78 there was an opening buyer of 20,000 of the July 10th weekly 9 calls for 18 cents.  These calls break-even at $9.18, up 4.5% on July 1oth.  There are no scheduled events as earnings are not expected until mid August.  Short interest is still very high at 36% of the float. Taking a slightly longer term snapshot of the stock’s performance, it is down 80% from the 5 year highs made in early 2012, and has spent the better part of the last two years below $10, and as low as $5:

JCP 5yr chart from Bloomberg
JCP 5yr chart from Bloomberg

3. JD – has been a stock that we have had our eyes on for the last couple months (read here and here) which has had a large build up in call open interest, much of it appearing to be directional.  Today when the stock was $34.50, one trader apparently rolled a bullish view out, selling to close 3,000 Sept 37 calls at 1.70 to close and buying 3,000 Dec 37 calls for 3.00 to open.  Later in the afternoon there was an opening buyer of 2,000 of the Sept 36 calls for 2.15 to open when the stock was $34.58

4. WMB – A day after WMB’s massive 25% gap following a $64, or $48 billion offer from Energy Transfer, one trader was looking for more upside. When the stock was $60.27,  5000 of the Sept 65 / 75 call spread were bought for $1.35 to open

5. XLF – total options volume ran almost 2x average daily volume, with two very large trades.  The first was an opening outright put purchase when the stock was 25.22, a trader bought to open 45,000 July 24th weekly 24.50 puts for 12 cents.  These puts break-even at $24.38 down 3.3% in a month, and will catch most of the XLF’s 10 largest components’ Q2 earnings reports.  In the afternoon there was a buyer of 130,000 Oct 26 calls for .395 to open, vs selling 4 million shares at $25.19.  This could be a stock replacement trade where a trader is looking to define their risk while playing for a breakout.