Big Printin’ 6/30/15: $AMD, $BHI, $STX, $WMT

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

1. WMT – made a new intra-day 52 week low and is quickly approaching massive long term support at $70. When the stock was $70.90 a trader bough the Jan16 62.50 / 72.50 risk reversal for 1.58 to open, selling 5,000 Jan16 62.50 puts at 1.07, helping to finance the purchase of 5,000 Jan16 72.50 calls for 2.65. This trade breaks-even at $74.09 on the upside, with losses below $64.09 on the downside.  Read our post on big box discount retailers today here, and why we think TGT could follow WMT and COST’s trading pattern over the past year (Name That Trade – $TGT Practice).  As I mentioned above, $70 is a crucial long term support level for WMT, this could be an interesting level to trade against from the long side, with defined risk.  Why defined risk? Taking a gander at the 5 year chart below it is fairly apparent that there is little support between $70 and $60:

2. AMD – Shortly before noon when AMD was trading 2.37 a trader rolled a bearish view, or possibly protection,  selling to close 180,000 July 2.5 puts at .24 to close and buying to open 180,000 Oct 2 puts for .16

3. STX – we highlighted the very poor technical set up in the disk drive maker in a post  (read here), but I also wanted to note that options volume ran 3.5 average daily volume with puts outnumbering calls 3 to 1.  While STX has not confirmed their fiscal Q4 reporting date, Bloomberg estimates July 17th (which would fall in July expiration).  The two most active strikes today were both in July regular expiration in what looked like a bearish roll. When the stock was $47.50 a trader sold to close 4500 July 50 puts at 2.97 and bought to open 4750 July 48 puts to open for 1.75.  This chart reminds me a lot of MU heading into last week’s 20% plunge following earnings:

4. BHI – yesterday in this space, I highlighted way out of the money put buying in the oil service stock who in November agreed to be bought buy Halliburton:

when the stock was 61.58 a trader paid .90 for 11,500 of the Oct 50 puts.  These puts seem expensive in both dollar and volatility terms, with a break-even down at $49.10, down 20% from current levels.

Today the stock saw some repeat action.  When the stock was $61.24 a trader paid $1.15 for 12,000 of the Oct 50 puts.  They were marked opening vs existing open interest of 11,600, which makes sense.  It appears a large holder is getting increasingly worried about protecting the stock below $50.