Here are a few apparently directional options trades that caught my eye in today’s trading:
XLK: There appeared to be an opening bullish bet in the S&P Technology Select etf when the etf was trading $47.70, with 20,000 of the Oct 28th weekly 48 calls bought to open for 60 cents, or $1.2 million in premium. Apple, Alphabet, Facebook and Microsoft make up 40% of the weight of the XLK, all but Facebook should report earnings prior to Oct 28th.
Because of the concentration among a handful of growth names, and the added benefit of AT&T and Verizon making up about 10% of the weight, and their positive performance ytd, the XLK has massively out-performed the S&P 500 (SPX) up only 3% vs the XLK up nearly 13%. I suspect this trader is looking for a dollar cheap defined risk way to play for new highs in the biggest leaders in the market:
XLE: there appeared to be closing selling of calls in the Energy Select etf. When the XLE was trading $66.65 shortly after the open a trader sold to close 30,000 of the Jan 75 calls at 43 cents, 45,000 have traded on the day vs open interest of 66,000. Exxon, Chevron and Schlumberger make up nearly 40% of the weight of the XLE, and the recent weakness in crude and Exxon (down 10% in the last few weeks) is weighing on the group. Despite the headlines, the XLE has spent the better part of the last 5 months trading between $65 and $70, with the 200 day moving average at $64 looking like healthy near term support:
MRVL: Marvell Technology, the communication chip company, saw some opening buying of out of the money calls in Jan17 expiration. When the stock was $12.94 a trader bought to open 10,000 Jan17 14 calls for 65 cents, or $650,000 in premium. The stock has nearly doubled off of its 2016 lows, and this trader may be looking for at least another 10% upside between now and January expiration. Considering the multiple of sales some semiconductors companies have been acquired for in the last year, MRVL at less than 3x (ALTR was acquired by Intel for 10x), the company with expected sales of $2.4 billion in 2016, a $5 billion enterprise value (net of $1.6 bn in cash and no debt), it may be on some investors short list for take-out targets.