Here is some apparently untied directional options trades that caught my eye in today’s trading:
TSLA: Shares of Tesla opened up 5% following Q3 results that showed a small profit, only its second in history. The problem is that back in early Sept TSLA CEO Elon Musk emailed employees suggesting they do what it takes to help make Q3 profitable. Shorts covered on the opening, and it appeared one trader who was positioned with a long bias took profits… selling a call spread to close. Just after the open when the stock was $211.38 a trader sold 4,000 of the Nov 200/215 call spreads at $8.10. The stock was perfectly rejected at its 200 day moving average:
FEYE: the net security vendor is down nearly 43%, and call volume ran hot a week before its Nov 3th Q3 earnings. Call volume was 3x average, when the stock was $11.80, 5000 of the Nov 11.5 calls were bought untied for $1.13.
ATVI: the video game publisher reports Q3 results on Nov 3rd, the options market is implying about a 5.5% one day post earnings move. There looked to be a good sized near term bullish, or possibly a leverage overlay to an existing long. When the stock was $44.12 shortly before noon a trader paid 51 cents for the Nov 44.50 / 46.50 1×2 call spread, 7.500 by 15,000. This trade breaks-even at $45.01, offers max gains of up to $1.49 from $45.01 to $46.50. Profits trail off from 46.50 till $47.99. I suspect this is an overlay to a long position of 750,000 shares. Taking a quick gander at the five year chart, if I was long the shares I might consider protecting the long rather than paying to add yield or leverage into the print as it’s been a straight line higer since early 2016 lows. While there is no overhead resistance as the stock is just off of its all time highs, $40 looks like a magnet on the slightest bit of bad news:
LOW: home improvement retailers and home-builders have taken it on the chin this week as the rise in interest rates might signal a pause in a trend that has nearly been unstoppable for the last couple years. Lowe’s is scheduled to report Q3 results on Nov 16th, and it appeared with the stock making new 7 month lows, down 20% from its 52 week highs made in July that one trader looking for a bounce either into or out of earnings. When the stock was $67.30 a trader paid $1.02 for 7,500 of the Nov 68 / 71 call spreads. This trade breaks-even at $69.02 and offers a max profit of up to $1.98 up to $71.
XLP: despite some decent results from consumer staple stocks like MDLZ, PG & PEP, the sector has been under-pressure of late with the rise in the U.S. dollar given most components of the etf’s overseas revenue exposure. When the etf was $52.72 a trader bought to open 28,500 of the Jan 52/ 47 put spreads for 86 cents, or $2.45 in premium. This trade breaks-even at $51.14, offering a potential max profit up to $4.14, or $11.8 million down to $47. To suggest that $52 is a massive support level is an understatement, with the next level of support down towards $50: