Mid-Day Options Order Flow: General Sentiment, Apple Inc. (AAPL) & Marvell Technology (MRVL)
Mid-day Flow Summary, 24 October 2007
General Sentiment
There is very active trading today amidst the sharp sell off based on Merrillís losses and subsequent ratings downgrade. The broad averages are down more than 1% today, but have risen off the lows that were set near 11:20am.
The CBOE VIX has rallied to 23.04 as traders worry that the financial sector may have further bad news ahead. Options volume is currently on pace for a nearly 18 million contracts.
Among single stocks the flow is generally bearish. The flow is led by call sellers and put buyers who are hedging year-to-date gains and/or positioning for a deeper potential correction.
Apple Inc (AAPL)
Apple again leads the single stock trading with more than 250,000 contracts changing hands by noon. The stock is off yesterday's highs and is currently trading near $183.29.
Options flow is characterized by upside call buyers in relatively small lots with institutional players on the sidelines. Analysis of the open interest changes resulting from yesterday's activity confirms that much of yesterday's call selling was designed to close positions and take profits.
Marvell Technology (MRVL)
We are seeing very interesting options flow in this semiconductor name today, with double the average volume and aggressive trading in out-of-the-money calls. The stock is currently down more than 5%, which may be related to Intelís 5% drop and the reported insider selling of MRVL shares.
At midday, we have more than 16,000 November 17.5 calls on the tape with aggressive buyers using multi-market sweeps and bidding implied volatility up from 37% to 47%. Mid-day ISE sentiment information confirms that 10,000 of these contracts are from customer accounts and are opening new positions.
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Apple again leads the single stock trading with more than 250,000 contracts changing hands by noon. The stock is off yesterday's highs and is currently trading near $183.29.
Options flow is characterized by upside call buyers in relatively small lots with institutional players on the sidelines. Analysis of the open interest changes resulting from yesterday's activity confirms that much of yesterday's call selling was designed to close positions and take profits.
Marvell Technology (MRVL)
We are seeing very interesting options flow in this semiconductor name today, with double the average volume and aggressive trading in out-of-the-money calls. The stock is currently down more than 5%, which may be related to Intelís 5% drop and the reported insider selling of MRVL shares.
At midday, we have more than 16,000 November 17.5 calls on the tape with aggressive buyers using multi-market sweeps and bidding implied volatility up from 37% to 47%. Mid-day ISE sentiment information confirms that 10,000 of these contracts are from customer accounts and are opening new positions.
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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