Intra-Day Significant Options Activity
ETF / Indices Mentioned: EEM, PPH, XLV
Stocks Mentioned: CLRK, EDS, GHCI, KLAC, NFLX, NVLS, PKI, SNV, SNY, WFT
ETF / Indices
In the iShares MSCI Emerging Markets Index (EEM, 122.39, +0.12%) investors bought 5,500 June 130 (.80d) puts to sell 11,000 June 120 (.40d) puts. The higher delta of the 130 strike puts indicates a bearish opinion over the next several months. This activity is consistent with the consistent stream of put buying we have observed in this product over the past several months. In another bearish ratio spread, investors today bought 2,500 June 115 puts vs. selling 5,000 June 105 puts.
Trading in the Health Care Select SPDR (XLV, 35.38, +1.32%) is indicating a near-term bullish sentiment this morning as investors accumulate front-month calls in significant size. In total, investors have bought 5,000 April 35 (.72d) calls paying $0.40. We have also observed bullish calling buying in equity component JNJ as well as increased call buying in PFE. In similar trading this week, investors in the Pharmaceutical Holdrs Trust (PPH, 82.69, +2.20%) bought 2,000 April 80 calls for $0.65 on Wednesday; however they may be taking profits today as 1,300 calls were sold at $2.25.
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In Electronic Data Systems (EDS, 28.49, +2.22%) we continue to see bullish call buying. As we detailed on today's edition of the Technology Weekly Event Watch, we saw over 26,000 calls trade yesterday with investors primarily buying 27.5 and 30 strike calls in multiple months. Today, the order flow is similar as the April, May and June calls have traded over 15,000 times so far. It is also noteworthy that participants have sold longer-dated volatility in Jan08 and Jan09 also this week, including 900 Jan09 35 calls today.
In Netflix Inc (NFLX, 24.58, -0.08%) opening investors sold 2,000 May 25 (.52d) puts at $1.75. On Monday of this week, investors were also noted selling a number of these same puts. In selling downside volatility, these investors expect decreased levels of volatility and/or limited downside movement. The trading also shows a comfort level of getting long the stock at the $23.23 level (25 strike - $1.75 premium), should they be assigned on their short put position. NFLX is expected to report earnings on 4/23/07.
Financial - Banks
We are seeing increased put activity in Synovus Financial Corp (SNV, 32.33, +0.28%) and the activity appears bearish. Opening investors bought ~2,000 August 30 (.20d) puts and we believe that there are buyers of the August 35 (.80d) puts also. The put buyers are gaining leverage to weakness in the shares over the coming months and upcoming earnings on 4/23/07.
Options in Color Kinetics Inc. (CLRK, 21.06, +1.08%) seldom trade; however, opening investors this morning bought 2,000 May 20 puts versus stock, delta neutral. Signaling no directional opinion, these investors are looking for increased levels of volatility heading into May expiration. CLRK is expected to report earnings on 4/26/07.
Over the last couple days we are seeing increased activity in the options of Genesis Healthcare (GHCI, 63.03, +0.65%) in what is likely speculation that the stock will make an upside move, higher than the current $63 cash bid for the company. Today investors bought September 60 puts/sold September 65 calls in risk reversals ~600 times paying a $0.25 versus buying stock for $62.90, on a 1-1 ratio. Additionally, we have also seen buyers of deep delta calls (such as the September 60 calls) in recent sessions.
In Weatherford International (WFT, 50.38, +3.20%) there is an influx of activity of activity in the options. Overall 10,000 April 50 (.60d) calls traded by early today and there are also buyers in the May and August calls across multiple strikes.
There is bearish trading in the options Sanofi-Aventis (SNY, 45.47, +2.46%) today. In one trade opening investors synthetically sold 200,000 shares of stock through 2,000 May 45 combos (buying puts/selling calls). Also today, opening investors bought 1,500 April 45 (.27d) puts paying $0.20.
Options in PerkinElmer Inc. (PKI, 25.15, +1.99%) saw a spike in volume as the stock trended up roughly 2.5% this morning with investors buying front-month calls. More specifically, opening investors bought 2,500 May 25 (.50d) calls for $0.85, versus an average daily volume of fewer than 30 contracts a session. Taking on a near-term bullish position, these investors are profit in the event the stock trades above $25.85 (25 strike + 0.85 premium) between now and May expiration. PKI is estimated to report earnings on 4/23/07.
We seeing somewhat bearish trading in both KLA-Tencor Corp (KLAC, 54.49, -2.12%) and Novellus Systems Inc (NVLS, 32.95, -2.66%) amidst weakness following earnings in Lam Research Corp (LRCX). In KLAC, we are seeing buyers of the, April 55 puts, the May 52.5 and 55 strike puts, and June 55 puts. We saw opening buyers of the June 57.5 puts yesterday. In NVLS investors bought ~1,100 September 32.5 (.40d) puts, we saw buyers of these same puts on delta neutral basis earlier this week.
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