Mid-day Flow Summary
Oracle Corp. (ORCL)
Yesterdays bearish order flow in Oracle (sellers of May 18 strike calls) continues today in the form of put buyers. With the stock trading up 1.5% to $18.88, more than 10,000 May 18 Puts have been purchased for $0.05 per contract.
Open interest confirms that yesterday’s call sales were opening transactions, as does the minimal open interest in the May 18 Put strike. This suggests a trader might be building a significant synthetic short-stock position through the near term.
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Cablevision (CVC)
Following news of an agreement to be taken private by the Dolan family, CVC options are trading well above their normal 1100 contract AVD. Totaling just over 12,000 contracts by mid-day, the flow includes several vertical call spreads that may serve as conservative bets on the deal. There is also one seller of 2000 at-the-money June calls on the CBOE.
With published terms specifying $36.26/share (and the stock currently trading near $35.50), the sale of 2000 June 35 Calls at $0.75 is most likely a merger-arb account looking to hedge a long CVC position. In addition, they are also looking to collect some time decay as the deal is not expected to close prior to September.
An examination of CVC option trading prior to this announcement shows nothing out of the ordinary. Over the past two, weeks most trading has involved put buyers. There was a single large print of 10,000 June 30 Calls on April 20th in a trade tied to stock. That trade was shown to be a closing transaction by open interest.
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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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