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Unusual Options Activity Review - UNH, AET, CAH, THC, ARM, FNF, ALD, HPT, VIX, UUP

Bullish Flow

A massive spread trade surfaced in United Healthcare (UNH) Wednesday. Shares gained 96 cents to $27.87 amid a rally in the managed care names. The group performed well after Republicans won governor races in New Jersey and Virginia, which might thwart Democratic plans for an overhaul of the industry. UNH moved up and 137,000 calls traded. The volume represents 7X the average daily and compares to 25,000 puts. Plus, the action included a massive call spread near the close where an investor bought 45,000 March 30 calls while selling 45,000 December 30 calls. This "time spread" appears to be a roll, or closing out a bullish position in December to open a similar one in March.

Bullish trading also surfaced in Aetna (AET), Cardinal Health (CAH), and Tenet Healthcare (THC).


Bearish Flow

ArvinMeritor (ARM) saw bearish trading Wednesday. Shares of Troy, MI auto parts maker finished the day down 41 cents to $7.76 and 5,375 puts traded (compared to 1,090 calls). 99 percent of the puts traded ask-side of the bid-ask spread, according to data from WhatsTrading.com. The top trade was a block of 3750 November 5 puts at the offer for 10 cents. It looks like premium buyer took positions in December 5 puts as well. The bearish activity comes ahead of a November 10 earnings release.

Bearish trading also surfaced in Fidelity National Financial (FNF), Allied Capital (ALD), and Hospitality Property Trust (HPT).

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Index Trading

Trading remains relatively quiet in the index market. 485,000 calls and 584,000 puts traded across all the cash indexes. The top trade was a block of 10,000 December 940 puts on the S&P 500 at the offer for $9.50. With the S&P up 1 point to 1,046.50, the trade was probably a portfolio hedge. However, in the end, it seemed that market anxiety levels eased a bit after the Fed's meeting passed. As evidence, the CBOE Volatility Index (VIX) fell for a third day and lost 1.09 to 27.72.


ETF Trading
    
The PowerShares Bullish Dollar Fund (UUP) saw a surge of activity Wednesday, before and after the FOMC statement. Prior to the rate announcement, more than 250,000 UUP November 23 calls traded. Then, shortly after the news was released, an investor bought another 50,000 contracts at 15 cents. In the end, 327,800 contracts traded. Plus, another 54,645 December 23 calls changed hands. Shares finished down 17 cents to $22.51, but the collective action in the options pits seems to reflect expectations for a move UUP beyond $23 in the weeks ahead.

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