Unusual Options Activity Review: SD, NVDA, JBL, HCA, HRB, AET, EGLE, HNR, .VIX, .SPX, DBA
Unusual Options Activity Review For Tuesday, June 19, 2012
Tuesday's Bullish Trading
Sandridge Energy (SD), the Oklahoma City, OK oil and gas company, rose 5.1 percent to $6.77 in active trading of 11.7 million shares Tuesday. Options on the stock were actively traded as well. About 24,000 calls and 2,150 puts traded on SD, a ratio of more than 10-to-1. One ambitious player apparently bought a 6,340-lot of September 10 calls on Sandridge for 9 cents per contract. Sep 10 calls on SD are 47.7 percent out-of-the-money and more than 7,100 contracts traded on the day. July 7, September 8, and Jan2014 $10 calls on SD were busy today as well. Some investors might be purchasing upside call options in anticipation of a rebound in the underlying stock. Shares are down 43.5 percent from the highs seen in July of last year.
Bullish trading was also seen in NVidia (NVDA), Jabil Circuits (JBL), and HCA.
Tuesday's Bearish Trading
H&R Block (HRB) bucked the bullish trend Tuesday. The stock lost 4 cents to $15.46 in relatively light volume of 2.8 million shares. But the options on the tax preparation company were busy, with 5,780 puts and 570 calls traded on HRB, a ratio of ten-to-one. The top trade was a 1,000-lot of July 12 puts for 10 cents when the market was 0 to 10 cents. It appears to be a downside put buyer, possibly looking to hedge a stock position from a dramatic move lower in the weeks ahead. July $12 puts on HRB are 22.4 percent out-of-the-money and expire in 31 days. 3,470 contracts traded on the day.
Bearish trading was also seen in Aetna (AET), Eagle Bulk Shipping (EGLE), and Harvest Natural Resources (HNR).
Index Recap
CBOE Volatility Index (.VIX) ticked higher despite a solid gain in the S&P 500 Index (SPX). VIX, which tracks the expected volatility priced in SPX options, typically moves lower when the S&P edges higher. But Tuesday, the S&P 500 rallied 13.20 points to 1,357.98 and VIX ticked up .07 to 18.28. The volatility index finished up more than 1 point, or 5.9 percent, from session lows (17.36). The index had already fallen 24.6 percent over the previous days and so Tuesday's rebound might have been technical in nature. The expiration was possibly a factor as well. June options on VIX settle Wednesday morning and volume in the product was heavy because it was the last day to trade the contracts. 451,000 calls and 382,000 puts traded in the VIX pit Tuesday.
Analyzing the ETF Market
Powershares DB Agricultural Fund (DBA) saw increasing volume Tuesday. Shares, which represent ownership in corn, wheat and other ag commodities, finished the day up 61 cents to $26.89 per share. Options volume was 7,800 calls and 415 puts traded on DBA. July 27 calls, which are 11 cents out-of-the-money and expiring in four and a half weeks, were the most actives. 5,380 traded. July 28 calls were the second most actives. Some investors are possibly looking for a rally in the agricultural commodities markets in the weeks ahead, but rather than buying physical commodities, futures, or DBA shares, they're taking positions in options that give the right to buy (or call) shares (DBA) at a set price (27 and 28) through a set date (July 21, 2012 expiration).
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