Intra-Day Significant Options Activity
ETF / Indices Mentioned: IGW, OIH, XLE
Stocks Mentioned: ACS, CCU, EBAY, FS, HSY, HWCC, IDTI, LPX, PEIX, RACK, RDY, VMED
ETF / Indices
In the rarely traded options of the iShares GS Semiconductor Index Fund (IGW, 59.75, -1.53%) opening investors bought 1,000 May 60 (.45d) puts paying $1.85. They are getting long at-the-money volatility while gaining leverage to downside movement in the sector over the next couple months. The largest components of the ETF include TXN, INTC, MOT and AMAT.
Investors in the Oil Service Holdrs (OIH, 148.55, +1.75%) were noted buying front-month volatility. More specifically, with the ETF trading at approximately $147.50, opening investors entered the market to buy 8,500 April 85 puts versus stock, delta neutral. Additionally, opening investors in the Energy SPDR (XLE, 61.11, +0.61%) bought volatility through 13,000 June 56 (.20d) puts; possibly in an effort to protect long delta positions in the event of a sharp downside move.
With unconfirmed takeover chatter circulating in Pacific Ethanol Corp (PEIX, 16.75, +3.68%) there are buyers of near term calls in the market. The 17.5 and 20 strike calls in April were the most active with about 3,000 contracts total being bought in both lines.
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Since the announcement of a $59.25 cash bid for Affiliated Computer Services (ACS, 59.00, -0.17%) we have seen steady buyers of July volatility through several different trades. Today opening investors bought 6,000 July 55 puts versus stock, delta neutral; investors bought 4,000 of these puts delta neutral last week. Additionally, we have also seen buyers of April 60 put/July 60 put calendar spreads and sellers of January08 65 call/July 60 call calendar spreads (buying July in both spreads).
Options order flow in Rackable Systems Inc (RACK, 17.19, -3.15%) has been bearish over the last week with both buyers of puts and sellers of calls. For instance today there are buyers of the April 17.5 and 20 strike puts (1,000 times each) and sellers of 1,000 June 20 calls. We have recently also seen buyers of the April 20/17.5 put spreads.
Distribution & Wholesale - Wire & Cable.
In rarely traded Houston Wire and Cable (HWCC, 27.50, +3.07%) options, volatility buyers purchased at least 1,000 May 30 (.35d) calls, paying up to $1.00. The investors will profit from the position if the stock trades above $31.00 between now and May expiration (5/19/07). HWCC calls have a 21-day average daily volume of 200 contracts.
In eBay Inc (EBAY, 33.00, -0.3%) opening investors bought 7,000 May 35 (.65d) puts this morning for $2.60 with the stock approximately $33.15 at the time. This order suggests that the investors have a short-term bearish stance on the stock. One week ago, the options were also active as investors sold 10,000 May 27.5p/37.5c strangles at $0.45, and in the front month, participants bought 10,000 April 32.5 calls vs. selling 10,000 April 30 puts. The trading comes ahead of earnings on 4/18/07.
In The Hershey Co. (HSY, 54.71, -0.89%) opening investors bought approximately 1,600 April 55 (.48d) puts paying from $0.95 up to $1.15. While taking a long volatility position, the investors are most likely speculating on downside movement and will have exposure through the company's next earnings release on 4/1/07. In comparison to today's volume, HSY puts have a 21-day average daily volume of approximately 300 contracts.
In Four Seasons (FS, 81.36, +0.02%) there is notable volume in the options today involving potentially bearish put buyers. Investors bought 2,500 April 80 puts for $0.35 and 4,000 May 80 puts for $0.525. In addition to today’s unusual volume, investors have bought the puts in previous sessions. April 80 put buyers were first seen in FS back in January and 3,000 May 80 puts traded earlier this week. Given the stock is in a deal to be bought for cash, the persistent put buying with a downside bias is interesting. FS is in a deal to be taken private by CEO Isadore Sharp (Triples Holdings) and Kingdom Hotels for $82 per share. The shareholder meeting to vote on the deal is expected to take place on 4/5/07.
In Clear Channel (CCU, 34.89, +1.01%) the volatility buying continues, although April is the biggest target today. In short, recent trading indicates that CCU will experience volatility at any time in the next several months, and due to the influx of outright put buying, there appears to be increased risk of a downside move. Today, investors bought 10,000 April 32.5 puts, delta neutral. In May, investors bought 3,000 May 35 puts and sold 6,000 May 32.5 puts, delta neutral. Also this week, roughly 20,000 May 35 puts have traded as well as 10,000 Janaury08 35 puts outright. CCU is in a deal to be acquired by Bain Capital and Thomas H Lee Partners for $37.60 cash per share. There is concern that the deal will be voted down at the shareholder meeting on 4/19/07. Fidelity, a 9.7% shareholder, has voiced opposition to the deal and more recently Highfields Capital Management said it would vote its entire 5% stake against the deal. The CCU transaction needs a 2/3 approval vote as opposed to a simple majority.
With unconfirmed takeover rumors circulating in Louisiana Pacific Corp (LPX, 20.58, +0.44%) we saw increased activity in the options. Specifically, investors were buyers of 20 and 22.5 strike calls in the April, May and August expiration cycles.
With Dr. Reddy Laboratories Ltd. (RDY, 16.26, +2.07%) trending up over 2.50% on the day, opening investors bought approximately 1,500 May 17.5 (.32d) calls paying $0.35 up to $0.55. The aggressive nature of the call buying suggests a bullish bias as investors are positioning for further upside movement. Earnings are estimated for release on 5/14/07.
In Integrated Device Technology (IDTI, 15.11, -1.76%) we are seeing order flow implying that investors are looking for movement before April expiration (4/21/07). Specifically, today there are buyers of 3,000 April 15 (.30d) puts while yesterday we saw sellers of the May 15 calls and May puts in separate trading. Currently, earnings are estimated to be on 5/8/07 which falls in the May expiration cycle.
In Virgin Media Inc (VMED, 25.50, -0.62%) opening investors bought 2,000 September 25 (.64d) calls. The higher delta of the calls suggests a bullish sentiment as investors expect upside between now and September expiration.
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