Options Flow Summary: General Sentiment & BJ Services Co (BJS)
General Sentiment
Another day of relatively quiet volume as many trading desks stick to a year-end "holding pattern." By early afternoon, we have just 6 million contracts on the tape. That is on pace for yet another 11 million contract day.
The sentiment is mixed with calls slightly edging out puts. Options volume in the financial names is currently leading the market.
The CBOE VIX has also fallen to 21.76. This activity is consistent with a decrease in the overall demand for portfolio insurance. The drop in demand is understandable since much of the recent correction has already been reversed.
BJ Services Co (BJS)
There is interesting volume in oil name BJS today. BJS has traded seven times its average daily volume of 3000 contracts. The bulk of this activity is focused on upside April calls. Today we have seen 21,000 contracts on the tape with nearly all of this volume in the April calls.
An impressive sweep order took place at 1:12pm as a buyer lifted 4,200 April 25 calls for $.20 and 3,100 April 30 calls for $.65. This happened at the same instant across multiple exchanges. Ten minutes later, 1,500 of the Jan-08 27.5 calls also came across the tape.
The short-term impact of this flow lifted the stock from $24.70 to $24.80 as the net hedge of 300,000 shares was absorbed by the market.
Sentiment data from the ISE confirms this flow was opening for a customer account. This suggests an aggressive view on BJS for the medium term.
Posted By: Trade Alert
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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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