Unusual Options Activity Review: GRPN, PXD, ANN, DAL, JCP, QCOR, DHR, JBHT, VIX, XLE, OIH
Wednesday's Bullish Trading
Groupon (GRPN) saw a day of active trading after the company announced a new mobile card payment system. The service, called Groupon Payments, will be available immediately on the company's iPhone and iOS apps. Investors applauded the offering and sent GRPN up 65 cents to $5.34 on heavy volume of more than 41 million shares. Meanwhile, options volume on GRPN was 39,000 calls and 17,000 puts. The September 5 calls, which were 6.6 percent out-of-the-money prior to Wednesday, were the most actives. 11,100 traded. The contract is now 6.4 percent in-the-money and will be expiring at the end of the week. Out-of-the-money October 5.5 calls and 5 puts were the next most actives in GRPN Wednesday. Those contracts expire in 30 days.
Bullish trading was also seen in Pioneer Natural Resources (PXD), Ann Taylor (ANN), and Delta Airlines (DAL).
Wednesday's Bearish Trading
Options on JC Penney (JCP) were actively traded Wednesday. The retailer was up 3 cents to $29.09 and almost 200,000 contracts traded on the stock, which is about 6X the normal options volume. The flow included 57,000 calls and 142,000 puts. One spread trade stood out, as an investor bought 25,000 November 27 puts on JCP for $1.68 and sold 50,000 November 22 puts at 43 cents. The 1X2 ratio spread, for 82 cents, is apparently a new position in the name (volume exceeds open interest) and, if so, represents a bearish play with a max payout if shares fall to $22 through the November expiration. Large Nov 17 – 21 (2X1) put ratio spreads in JCP traded in late-June and were very similar to Wednesday's trades. Those spreads do not seem to be working out too well so far, however. The stock is up from about $23, or $6, since June.
Bearish trading was also seen in Questcor Pharmaceuticals (QCOR), Danaher (DHR), and JB Hunt (JBHT).
CBOE Volatility Index (.VIX) lost .30 to 13.88 and options on the index were actively traded Wednesday, as some investors were probably rolling positions to the October term after the September contracts on the index expired in the morning. The settlement for VIX Sept options was 14.03 and down from 15.13 in August. 14.03 represents the lowest settlement value for VIX options in more than 5 years. Now that the VIX September options have expired, some investors were probably opening new similar positions in October. About 785,000 options traded in the VIX pit Wednesday and, of that, about 66 percent, or 516,000 contracts, were in the October term, according to Trade Alert data.
Analyzing the ETF Market
A number of the energy ETFs saw increasing activity after crude oil slipped Wednesday. Crude lost $3.63 to $92 per barrel in the wake of bearish weekly inventory data and the move seemed to weigh on shares of many energy-related companies. SPDR Energy Fund (XLE), which holds all of the energy companies from the S&P 500, lost 73 cents to $74.72 and options volume was 2X the daily average. 62,000 puts and 42,000 calls traded in XLE. Oil Service Holders (OIH) is a fund that holds shares of leading oil drilling and oil equipment companies. OIH lost 49 cents to $41.98 and 42,000 puts/4,900 call traded on the ETF. Finally, United States Oil Fund (USO), the ETF that tracks crude through futures contracts, slipped $1.45 to $34.12 and more than 250,000 options traded. Roughly 105,000 puts and 147,000 calls traded in USO Wednesday.
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