Options Flow Summary and Unusual Activity Alert: Brocade Communications (BRCD)
General Sentiment
Traders are always busy on expiration Friday, and today is no exception. Broad averages are lower and the CBOE Vix is off slightly to 25.13, as the ëlong weekendí effect slightly compresses premiums.
Calls and puts are trading nearly equal amounts, with a bullish net bias to the flow.
Brocade Communications (BRCD) $7.51 +10.93%
The stock is higher following last nightís earnings. BRCD options have traded 8 times their normal levels with a bearish directional sentiment. Put buyers and call sellers dominate with a focus on March and April expirations.
Despite the rally in the stock, more than 6,200 of the March 8 strike puts have traded this morning with implied volatility lifting 6 points to 50% and 63% of the flow trading offer-side. Interestingly, average execution size is just 12 contracts in the series, suggesting a buyer continually ëreloadingí a buying algorithm rather than showing a large bid all at once.
Yesterdayís pre-earnings trading included a timely buy of 10,000 March 7 calls for $.40 on the ISE to open a new institutional position. This buyer almost doubled his money and may be locking in gains today with the puts.
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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