Here is some apparently directional untied options activity that caught my eye in today’s trading:
DLTR: Shares of the dollar store are down 22% from their all time highs made in mid August, and having just bounced off of important technical support at $75:
Put volume ran hot today, when the stock was trading $77.85 at 1pm it appears that a trader sold to open 7600 of the Oct 75 puts at 31 cents. This appears to be a bullish trade, as the trade was reported as a sale, the times and sales appear to be sold and the intra-day graph of implied volatility in the strike suggest the same. But, selling short dated low delta puts in a stock like DLTR that is broken is generally not a great strategy, unless you were either going to put in a buy order below the market, or possibly do the same to cover a short. If this was an outright sale then if the stock is above $75 on Oct 21st close, then the trader will receive 31 cents, or $235,000.
HCA: Hospital stocks have certainly been in focus during the presidential campaign with all of the rhetoric for and against Obamacare. There was some decent size put activity in HCA today, but we wont really know until tomorrow whether it was opening or closing. When the stock was trading $76 just after 1pm there were a few blocks of Oct 75 puts bought, with the largest being 8000, with the total of 16,000 trading for 90 cents. This amount was equal to the existing open interest in the strike, which might suggest that they were closing. But the activity caught my eye none the less as the stock has been in a slight downtrend for most of 2016, making a series of lower highs and lower lows and hovers above the long term uptrend:
WFC: shares of the beleaguered bank have bounced 5% in the last three trading sessions but are still down 16% on the year, and down nearly 20% from its 52 week highs. The company is set to report Q3 earnings Friday before the open, the options market is implying about a 1.9% one day move, which is inline with the 4 qtr average. Shortly after the open today, when the stock was trading $45.51 it looked as if a trader rolled a short dated disaster hedge, selling to close 31,000 Oct 40 puts at 2 cents, and buying to open 30,000 Nov 30 puts for 21 cents to open. This put position breaks-even at $39.79, down 12.5% from the trading level. The options market is saying there is about a 9% chance these puts will be in the money on Nov expiration.
WFC is in an obvious downtrend, having made a series of lower lows since its post all time highs made in mid 2015, with $40 being the next real long term support level to my eye, which is why such a low delta roll appears to me to look like a disaster hedge for a long: