Option Block 104: Piling Onto Groupon

Posted November 8th, 2011 by The Options Insider in Radio Show

Option Block 104: Piling Onto Groupon

Trading Block: A bit of a market turnaround, but mainly a relatively mild day. What a strange place VIX and volatility are in general right now. Priceline (PCLN) earnings today after the close, trading over $500. The frenzy began Friday as Groupon went public -- when will the options go live? A quick metals/commodity rundown.

Odd Block: Unusual activity in:
McMoRan Exploration Co. (MMR) - Two noticeably bullish option trades in Gulf of Mexico oil and gas producer McMoRan Exploration Co. (MMR) today with investors looking for the stock to climb back to the 16 - 17.50 range over the coming months. The largest trade saw the purchase of 2,000 January 15 Calls and the simultaneous sales of 2,000 January 17.5 and 19 strike calls. This traded for a net debit of $.08 and reach maximum profit if the stock settles at $17.50 by January expiration. A more short term trade saw the purchase of the December 10-16 call spread 1,500 times for $3.55. No news in MMR today to account for todayís activity.

Knight Capital Group (KCG) - FRIDAY REVIEW The global financial services firm is seeing bearish option order flow for the second day in a row. Thursday saw new positions opened in the January and April 10 puts with open interest increasing more than twofold in both strikes. Friday's activity was even more eye opening with investors focusing on the 35% out-of-the-money 7.50 strike bearish contacts in the December and January expiries with VWAPs of $.15 and $.32 respectively.

Career Education Corp. (CECO) Put selling on the for-profit provider of education services may represent a vote of confidence by at least one options strategist positioning for shares in Career Education Corp. to exceed $7.00 through November expiration. The stock was hammered in the most recent six-month period, declining around 75.0% off its 52-week high of $27.60 on June 2, down to a more than 10-year low of $6.92 last Thursday. CECOís shares are in recovery-mode today, gaining 5.25% in the first half of the session to trade at $8.40 as of 11:15 in New York. Options traders exchanged some 4,400 puts at the Nov. $7.0 strike against open interest of 1,544 contracts. It appears the majority of these put options were sold for an average premium of $0.10 apiece.

Xpress Block: John Grigus discusses the details of the MF Global account, which has brought about stress at OX fielding questions.

Around the Block: Earnings! Disney 11/10 - General Motors 11/9 - Cisco 11/9. Also, jobless claims 11/10.