Mid-day Flow Summary: ORCL & STJ
Oracle Corp (ORCL)
Oracle options are trading more than twice their daily average. By noon today, there were nearly 50,000 contracts on the tape. Rumors have been circulating regarding a stake in SAP, and today a buyer of July 20 calls emerged. Just after 11am in an electronic order on the CBOE, a buyer paid $.55 for 25,000 of these options. The stock lifted nearly $.10 over the following minutes as traders realized the nature of the trade and implied volatility.
The contract is now trading near 27.5%, compared to opening levels below 25%. Spillover into other ORCL options has been significant with buyers of 19 and 20 strike calls in June, September, and December options.
Oracle options are trading more than twice their daily average. By noon today, there were nearly 50,000 contracts on the tape. Rumors have been circulating regarding a stake in SAP, and today a buyer of July 20 calls emerged. Just after 11am in an electronic order on the CBOE, a buyer paid $.55 for 25,000 of these options. The stock lifted nearly $.10 over the following minutes as traders realized the nature of the trade and implied volatility.
The contract is now trading near 27.5%, compared to opening levels below 25%. Spillover into other ORCL options has been significant with buyers of 19 and 20 strike calls in June, September, and December options.
ADVERTISEMENT
Accurate Trend Prediction Even in Volatile Markets
Get complimentary forecasts on any market - no obligation. Plus vital
trading information from "Trend Forecasting With Technical Analysis".
Get Your Complimentary Forecasts Now
Get complimentary forecasts on any market - no obligation. Plus vital
trading information from "Trend Forecasting With Technical Analysis".
Get Your Complimentary Forecasts Now
St Jude Medical (STJ)
STJ options are trading triple their average daily option volume today with flow dominated by call buyers. Over 5,000 contracts have traded in the July 45 calls.
Just before 10am, there was a multi-market sweep order paying $1.10. This was followed later in the moring by 2500 on the PHLX for $1.20. Unusual volume in STJ options was also seen on May 21st with buyers paying lower prices for a total of 5000 of the same options. This appears to be an investor positioning for positive reaction to earnings on July 19th, which is the day before expiration.
General Sentiment
Among all listed options today (index, etf, and equity) approximately 1.2 million puts and 2.5 million calls have traded by noon, for an industry put/call ratio of .48. The flow is showing a slight bias toward call sellers and put buyers.
With a relatively flat market, the CBOE VIX index is down slightly to 12.84. VIX July 20 calls continue to see buying with 20,000 trading today, making 88,000 on the week. Open interest in that option grew by 25,000 to a current level of 38,489. Todayís volume will most likely increase the OI to more than 50,000 contracts. This illustrates the use of the option as a hedge against a severe downside move.
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.
View Henry Schwartz's post archive >
