Unusual Options Activity Review: CLWR, S, ANR, AMD, ROST, T, VZ, TWX, VIX, SPX, CORN
Thurday's Bullish Trading
Bullish trading in Sprint was highlighted in the midday update after the stock rallied around news Softbank is mulling making a substantial investment in the phone company. Clearwire (CLWR), an infrastructure company that builds some of the networks used by Sprint, rallied on speculation that, like Sprint, Softbank has the company on its radar. CLWR surged 70 percent to $2.22 on heavy volume of 168 million shares. Meanwhile, 113,000 calls and about 3,000 puts traded in the name which is almost 80X the daily average options volume for CLWR. November 2.5 calls, which are now 12.6 percent out-of-the-money and expiring in five weeks, were the most actives. 77,255 traded. October, November, and December 2 calls on the stock were busy as well.
Bullish trading was also seen in Sprint (S), Alpha Natural Resources (ANR), and AMD.
Thursday's Bearish Trading
Ross Stores (ROST) saw relative weakness and increased options activity Thursday. Shares of the apparel retailer lost $2.01 to $62.17 and options volume on the stock was 4X the daily average. About 13,000 puts and 1,765 calls traded on the ticker. Much of the volume was due to spread trading. One investor bought the November 55 – 60 put spread on ROST Thursday for 75 cents per spread, 3000X. That is, they bought 3,000 of the November 60 puts for $1 and sold 3,000 November 55 puts at 25 cents each. The spread traded 5000X on the day and appears to reflect concerns about additional losses for the stock through the November expiration. It might be related to earnings. The company is due to report results around November 15.
Bearish trading was also seen in AT&T (T), Verizon (VZ), and Time Warner (TWX).
CBOE Volatility Index (.VIX) slipped again amid light volumes and little net movement for the market averages Thursday. The S&P 500 Index (.SPX) traded in an 11-point range but finished up just .28 to 1,432.84. Meanwhile, VIX, which tracks the expected or implied volatility priced into SPX options, dropped .70 to 15.59. Trading was light in the VIX pit, with just 255,000 calls and 108,000 puts traded. A total of 527,000 calls and 603,000 puts traded across all index products, which is only 83 percent of the recent daily average levels, according to Trade Alert data. Macro players in the index market might be in a wait-and-see mode following a relatively light week of economic news, but ahead of a flood of earnings and economic releases in the week ahead.
Analyzing the ETF Market
Teucrium Corn Fund trades under the easy-to-remember ticker symbol CORN and is an exchange-traded fund that attempts to track corn prices through futures contracts. Shares rallied $1.89 to $49.24 Thursday after the grains rallied on a USDA crop report showing falling global supplies. CORN was up 4 percent, but some players in the options market don't seem convinced the rally can hold. 7,340 puts and 2,425 calls traded on the ETF Thursday, led by opening activity in the November 50 and 55 puts, which expire in 36 days.
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