Options Flow Summary: General Sentiment & BMY
The CBOE VIX spent a few hours below 20 yesterday. It provided a brief respite for traders who were looking to cover short volatility positions that have proven painful during the past weeks.
The traders who chose not to reel-in positions may be kicking themselves! This morning there was a dramatic 200 point sell-off in the Dow Industrials which lifted the VIX back above 25 amid active trading. In fact, a vertical call spread executed in VIX options early in the day points to continued volatile trading for the foreseeable future.
In this trade, a buyer paid $1.85 for more than 20,000 September 20-25 call spreads on the VIX index itself. This position has a maximum payout with a VIX settlement of 25 or higher next month.
Bristol Myers Squibb Co (BMY)
BMY is trading triple its normal daily average, with 174,000 contracts on the tape. It has been dominated by January 32.5 call buyers. The stock is trading near $29.29 and buyers are paying $.80 to $.90 for these calls.
With open interest of nearly 500,000 contracts, this volume may continue the flow that was seen yesterday. At that time, buyers paid nearly the same price for 26,000 contracts to close similar size open interest.
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