Here is some large siazable options activity that caught my eye in today’s trading:
XOP: the S&P Oil & Gas etf was down more than 2% as Crude Oil has one of its worst days in months, down nearly 4% as I write. Put volume exploded today in the etf, 4x average daily volume, and 8x that of calls (162,000 to 21,000). The largest trade (contracts) of the day was a spread trade where a trader bought to close 13,500 March 40 calls for $1.20, and sold to close 59,000 Dec 30 puts at 33 cents shortly after 1pm. This might have been a trader closing a collar on the XOP.
For those who believe that oil and U.S. stocks are tightly correlated (at least from a sentiment standpoint) it’s worth watching how Crude acts as it nears the uptrend that has been in place since the Feb lows, after what appears to be a rejection last week at a double top at $52:
AMAT: as the semiconductor M&A nears a $150 billion total on they year, at least one trader is positioning for a near term pop in equipment maker Applied Materials. When the stock was trading $29 a trader sold to open 6,000 Dec 28 puts at 88 cents ($528,000 in premium) and bought to open 9,000 Dec 20 / 32 call spreads for 55 cents ($495,000 in premium). The worst case scenario is that the trader is put 600,000 shares at $28 on Dec expiration if the stock is $28 or lower. Between $28 and $32 the trader would receive the $33,000 credit for the risk reversal, and can make up to $2 between $30 and $32. To my eye these strikes make sense with nice near term technical support at $28 (but watch out below because there is none till about $26), with a the max profit coming just above the prior 52 week highs at $32:
MSFT: shares of Microsoft finally made a new all time high from levels not seen since December 1999 following their better than expected earnings on Oct 20th. With the stock on a bit of island above the 3 month gap since its fiscal Q4 results in mid July, it appears that some traders are closing out of some prior bullish bests. The largest block of the day was a closing sale of 20,000 Jan 62.50 calls at 86 cents when the stock was trading $60.23, followed by 10,000 of the Jan 60 calls sold at $1.97, and 11,000 of the Nov 62.50 calls sold at 14 cents. The stock should find good technical support back towards $58: