Mid-day Flow Summary
Whole Foods Market Inc (WFMI)
Poor earnings are pounding WFMI, which is down 11% to $40.60. Not surprisingly, Whole Foods options are among the most active in the market today with more than 60,000 contracts on the tape so far. This is a significant departure from WFMI's average daily volume of only 12,000 contracts. The most active contracts are the May 40 puts, with nearly 15,000 changing hands this morning. The majority of this activity was seller-initiated.
The May open interest was significant going into earnings,with 24,000 May 50 calls open (most of which traded yesterday), as traders positioned for an upside reaction. Today’s selling activity in the 40 puts indicates traders are expecting stability from current levels. However, upside call buying still persists with buyers in the May and June 45 calls along with smaller purchases in the 50 strike calls.
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CVS Caremark Corporation (CVS)
Retailer CVS announced a share repurchase program yesterday and the stock is currently trading near its highs above $38. Most options activity is concentrated in the May 37.5 calls, with 14,000 contracts changing hands this morning.
This volume includes an aggressive multi-market sweep order to sell 6000 contracts for $0.70 just before 10am. The significant open interest of 47,000 contracts in this option suggests that the seller is either a long-stock overwriter or a recent buyer of the 37.5 calls (20,000 traded in March for $.20) who is taking his profits.
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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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