Here is some generally directional options activity that caught my eye during Monday’s trading:
1. EBAY – made a new all time today, on investor excitement about the impending tax free spin off of PayPal. There was a bullish roll in the options. When the stock was 63.
2. YELP – two weeks ago the stock cratered 20%
4. BHI – when the stock was $60 a trader sold to close 11,500 Oct 50 puts at 90 cents. On June 29th and 30th we highlighted the following trades in the stock respectively:
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.
This is a great example of the stock going in the desired direction of the trader, but a decline in options prices and time offsetting a slight gain that would normally have been received from the short deltas. And considering the fact that this trader appears to be the entire open interest the other side of the trade were well aware of his existence. And the trader is likely doing something related to the HAL deal anyway and not making money on these puts is probably the least of his concerns.
5. MRVL – options volume ran more than 5x average daily, with 90% of the volume coming in opening calls as Bloomberg reported an investment fund in China may have an interest in acquiring the company. In late May we considered the possibility of investors turning their sites to MRVL after BRCM’s buyout (read here). Today’s rumor got traders looking at short dated calls, with more than 7,000 of the July 17th and 24th weekly calls being bought, while 3,000 of the Aug 14 calls traded hands.
6. FXE – It looks like there was a closing trade in the Euro ETF originally opened in March. A trader sold 200,000 Jan 102/94 put spreads at 96c when the ETF was $108.03. The trade was opened on March 10th when FXE was near $105.25 for 1.96. That’s a $20M loss if you’re keeping score at home.