Options Flow Summary: General Sentiment & MSFT
General Sentiment
The broad averages are close to unchanged after a down morning. Options volume appears to be on track for a light day. Nearing the end of the day, the options flow is somewhat bearish. We have seen nearly equal numbers of calls and puts changing hands, a general call seller/put buyer bias and the CBOE VIX up .75 to 27.
Microsoft (MSFT)
An interesting large trade took place in Microsoft this afternoon on the ISE. The stock is currently trading up slightly, near $28.68 and a buyer paid $1.23 for 26,700 30 strike calls in a single block. Examination of cash block trades suggests that this trade was tied to 1.1 million shares printing on the Midwest stock exchange at $28.63.
With open interest of more than 435,000 calls, this is the 2nd largest position existing in the US listed market. It is related to the companyís use of broker-dealers for liquidity in their employee stock and option incentive plans. The flow suggests the dealer on this trade sold to a large institutional client who believes in upside or increasingly volatile trading for the rest of the year.
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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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