Unusual Options Activity: S, OMX, ZION, STI, PALM, AIG, NVDA & PEP
A large seller of Sprint (S) puts surfaced early Thursday, the day after the stock fell 7.9 percent on disappointing earnings news. Shares are down another 11 cents to $3.25 and this put seller collected 3 cents per contract on 36,500 Feb 3 puts in morning trading. The premium sale might close an existing position.
Either way, it appears to be a bet that shares will hold above $3 through the February options expiration, which is a little more than one week away. In addition, because of the holiday Monday, after today, February options only have five trading days of life remaining.
Officemax (OMX) is up 38 cents to $14.42 and options action is picking up ahead of earnings. The company is due to report results on February 17 and two days before the February options come off the board. Some investors appear to be bracing for good news. February 15 calls have traded more than 2200X. In addition, with 98 percent of the volume trading at the asking price, it appears that call buyers are dominating the trading activity.
A couple of regional banks are seeing bearish spread trading Thursday. In Zions Bancorp (ZION), shares are down 33 cents to $18.19 and an investor apparently opened a bearish spread by purchasing 12,400 April 17 puts at $1.35 and selling 12,400 April 13 puts at 35 cents. This spread costs a $1 debit and offers a $3 pay-off (excluding commissions) if shares fall to $13 or less by mid April.
Similarly, SunTrust (STI) is down 45 cents to $22.45 and an investor was focused on the April 22 - 18 put spread. It looks like they bought 4,000 April 22s at $1.58 and sold 4,000 April 18 puts at 48 cents. This debit spread, at $1.10, offers a $3.90 pay-off if STI falls to $18 or less by the April options expiration. In both cases, these put spreads might be designed to hedge positions in shares of the regional banks.
Implied Volatility Movers
PALM implied volatility is easing a bit after Citigroup analysts upgraded the stock to Hold from Sell. Shares added 30 cents to $9.91 and options trading is brisk, with 17000 calls and 17000 puts traded. Meanwhile, implied volatility has eased to 63, down about 5.5 percent since yesterday.
AIG options volume is running 2X the usual, with 80,000 contracts traded and call activity accounting for about 69 percent of today's trading.
Options activity in NVidia (NVDA) rose to 2X the usual, with 52,000 contracts traded and put volume accounting for about 61 percent of the volume.
Pepsico (PEP) options activity rose to 2X the usual, with 52,000 contracts traded and call volume representing 65 percent of the activity.
Increasing volume was also seen in Boston Scientific (BSX), Delta (DAL), and Wellpoint (WLP).
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