The S&P 500 (SPX) clawed back a good bit of its early 1% losses by days end. One noticeable theme in today’s trading was options traders rolling existing positions:
GS: bank stocks under-performed the broad market most of the day, with the XLF closing down 1% in front of tomorrow morning’s earnings announcements from BAC, C & JPM. One trader adjusted a long call position in Goldman Sachs which does not report until Oct 18th. When the stock was $166.10 a trader sold to close 5,000 Nov 180 calls at 91 cents and bought to open 5,000 Nov 175 calls for 2.01. This new position now breaks-even at $175.91, up 6% from the trading level. $172 has been an important technical level dating back to the start of 2015:
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XBI: earlier today I discussed the technical set up and some of the fundamental headwinds for biotech stocks (Every Drug Stock Has Its Day). The S&P Biotech etf, XBI saw an apparently bearish roll when the etf was $61.75. A trader sold to close 5,000 Nov 65 puts at $4.75, and bought to open 5,000 of the Nov 60/53 put spreads paying $1.77. This spread breaks even at $58.23 on Nov expiration and offers profit potential up to $5.23 down to $53. To my eye, the etf bounced just above key technical support at $60:
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XLB: the S&P Material Select etf saw either a large bearish roll or the adjustment of a hedge. When the XLB was trading $46.20 a trader sold to close 15,000 Nov 46 puts at $1 and bought to open 20,000 Dec 45/41 put spreads for 73 cents. This spread breaks-even at $44.27, with max profit potential of 3.27 down to $41. The etf found support just above where it was supposed to just above its 200 day moving average:
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The following trade was not a roll, but is worth noting on a day that Delta Air Lines (DAL) beat and the sector as a whole is ripping:
JBLU: one of the worst performing airlines on the year, down nearly 20%, and down 32% from its 52 week high made last December saw a decent size call buyer. When the stock was $18.09 there was an opening buyer of 20,000 of the Dec 20 calls paying 43 cents. These calls break-even at $20.43, up 13% from the trading level. The next identifiable catalyst for JBLU will be Q3 earnings on Oct 25. $19 appears to be important near term technical resistance:
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