Options Order Flow Summary & Unusual Activity Alert: Sprint Nextel (S), Pfizer Inc (PFE) & MetLife Inc (MET)
General Sentiment
Itís safe to say that most traders are eagerly looking forward to the three-day weekend ahead. In heavy expiration Friday trading, the broad averages are lower by about 1%, after an early rally faded. This puts the weekís decline near 5% for the S&P500.
The CBOE VIX is approaching 28.5 on a combination of put buyers trying to hedge their holdings and call buyers looking for some sort of recovery.
Sprint Nextel (S) $8.52 -26.36%
The stock is plunging on announcements of job cuts and subscriber losses. Options volume is above normal, with 21,000 puts and 32,000 calls on the tape by 2pm EST.
Directionally, the flow is decidedly bullish with consistent buyers of the Aug 11 calls. Most of this activity is in the form of multi-market sweep orders that maximize available liquidity.
Trading from $.55 to $.60, the call buying activity appears to be largely customer-initiated for the purpose of opening new positions. This might suggest some interest in a recovery or other positive event in the coming months.
Pfizer Inc (PFE) $22.57 -1.71%
We are seeing significant buying of the expiring Jan 22.5 puts today, with more than 40,000 trading. Buyers are paying $.05 to $.10 in what is most likely an attempt to close some of the 182,000 contracts of open interest in the contract.
MetLife Inc (MET) 56.62 -2.81%
Despite a 10% price drop over the past 3 days, some options traders are looking for MET to continue to fall.
MET options have surpassed 5 times their normal volume today. Consistent buyers have accumulated nearly 2000 Feb 55 puts, March 50 puts, and Jan-09 40 puts. This activity has lifted at-the-money implied volatility from 45% to 50%.
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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