Mid-day Flow Summary: ALU, BMY & HLT
Alcatel Lucent (ALU)
ALU options are trading more than 5 times their daily average volume today. The flow has been dominated by a large block of 10,000 September 15 calls purchased on the ISE this morning for $0.55.
The underlying price is currently near $14.38. This trade will create new open interest, which suggests a large customer might be positioning for upside movement later this summer. Earnings are expected August 9th.
Earlier this week the company reported a sale to China Unicom, but price movement in the stock was muted.
Bristol Myers Squibb Co (BMY)
A large multi-market sweep order was executed this morning. This allowed a buyer to take more than 13,000 September 40 calls for $.15 in an opening transaction. Earnings are expected July 26th and this transaction could be a cheap far-upside play on that event.
The stock is currently trading at $31.90 which is $.35 off a 52 week high. It would take a 25% move for these calls to become in-the money.
Hilton Hotels Corp (HLT)
The Blackstone deal was announced Tuesday post-close. Today the stock is up 25% to $45.52. By noon the volume had totaled 35,000 contracts, which is 6 times the average daily volume. A large surge in traffic is to be expected following such dramatic news.
Of note is the volume that traded prior to the announcement on Monday. At that time, nearly 6000 August 40 calls traded at prices from $.15 to $.40 to create new open interest. Those calls are being sold today for prices near $5.70 for a massive gain.
On June 27th another significant trade took place, with 5000 HLT August 35 calls trading for $1.20 tied to stock on the PCX. Nearly 850 have traded today at prices near $10.80.
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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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