Mid-day Flow Summary
Motorola (MOT)
Motorola (MOT) options are leading the most active list today with a massive combination trade on the CBOE. Just before 10am EST, a trade of 25,916 MOT May 18 Puts versus nearly 17,000 July 19 Calls was executed. Option prices post-trade indicate the initiator was buying calls and selling puts. This ‘collar’ type trade has a payoff profile similar to ownership of nearly 2 million shares of stock, with magnified downside risk based on the larger number of puts traded.
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Yahoo (YHOO)
Yahoo (YHOO) options continue their elevated level of activity, with today’s trading dominated by premium sellers. The stock is trading near $27.90. By mid-day, more than 22,000 July 30 Calls have traded with 93% of the activity on the bid. May at-the-money 27.5 Puts are also seeing selling pressure, with just over 20,000 on the tape.
Pfizer (PFE)
There is also heavy option volume in Pfizer (PFE) this morning ahead of tomorrow morning’s scheduled earnings. Over 10,000 September 30 Calls have traded, with the majority from an aggressive buyer sweeping multiple markets just before 10am. The initiator looks to be positioning himself for positive first quarter results after the cost cuts that were announced in January.
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About Henry Schwartz
Henry Schwartz has traded derivatives on US and European exchanges for nearly 20 years. His experience includes market-making and institutional trading at the Hull Group, Salomon Brothers, Bear Stearns and most recently Banc of America Securities, where he led the electronic market-making project coincident with the launch of the ISE. His current work involves real-time stream analysis of options market activity for a number of leading institutional sell-side firms.
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