Options Flow Summary: General Sentiment & GE
General Sentiment
The CBOE VIX approached 30 this morning as global markets slid. As a result, options buyers have adjusted their expectations of future volatility even higher.
The broad-based SPX index dropped 1.6% to a low of 1429.74 by 10:40am. Not surprisingly, option sellers demanded higher premiums for both puts and calls in virtually all market segments.
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General Electric Company (GE)
GE options are trading at nearly twice their normal pace, with 165,000 contracts on the tape by mid-afternoon. The flow is dominated by call buyers focused on the December 40 strike. More than 40,000 of these options have traded today, including a large block of 20,000 bought for $1.58 on the Amex.
Earlier, the stock touched a low of $37.19. This trade took place on the ëbounceí as the market was on its way to unchanged. It looks like it will add to significant open interest at the strike in December and January 08 options, where a total of 271,000 calls are currently outstanding.
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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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