Unusual Options Activity Review: NVDA, SKX, HCA, RCL, PHM, FMCN, FAST, CTL, .VIX, .SPX, XLF
Unusual Options Activity Review For Monday, June 11, 2012
Monday's Bullish Trading
NVidia (NVDA) ticked 14 cents higher to $12.26 in active trading of 20.8 million shares after UBS upgraded the stock to Buy from Hold and after Apple announced that MacBook Pro has been updated with NVidia graphics chips. Options on the stock were busy as well. 42,000 calls and 7,220 puts traded on the stock Monday. June 13 calls, which are 6 percent out-of-the-money and expiring in four days, were the most actives. 11,950 traded. July 13, June 12, July 12, and July 14 calls were the next most actives. High volume in the stock and increased activity in short-term calls seems to reflect the optimism surrounding the analyst upgrade and Apple's announcement Monday. However, after hitting a midday high of $12.73, NVidia shares fell along with the broader market in afternoon action and closed down 3.7 percent from its best levels.
Bullish trading was also seen in Skechers (SKX), HCA, and Royal Caribbean (RCL).
Monday's Bearish Trading
The largest equity options trades Monday were in homebuilder Pulte Group (PHM) after one investor initiated a hefty put spread on the stock. In morning action, a block of 24,500 June 8 puts traded on PHM at the 6-cent asking price while 24,500 October 8 puts traded for 94 cents. Shares lost 57 cents to $8.41 and this June ñ October 8 put spread that traded for an 88-cent debit, looks like a roll. The investor might have been exiting a position of out-of-the-money puts that expire at the end of the week to salvage six cents in time value and also opening a new position in October 8 puts. The spread trader might have a large position in PHM shares and is rolling a "protective put" hedge out four months.
Bearish trading was also seen in Focus Media (FMCN), Fastenal (FAST), and CenturyLink (CTL).
CBOE Volatility Index (.VIX) dipped to less than 20 early Monday for the first time in more than two weeks, but the early losses were quickly erased and the market's "fear gauge" spent most of the session trending higher. At the end of the day, VIX was up 2.33 points to 23.56 and had rallied 20 percent off session lows. Volumes were light Monday, however, with 235,000 calls and 360,000 puts traded on the S&P 500 Index (.SPX), which is only about two-thirds (66 percent) of the recent average daily volume, according to Trade Alert data. Volumes will almost certainly pick up later this week. Friday is quadruple witch expiration, with futures, equity, single stock futures, and futures options all expiring.
Analyzing the ETF Market
SPDR Financial Fund (XLF) saw interesting trading activity for a second day. The top trades Friday were part of a straddle, in which the investor bought 20,000 July 14 puts on XLF at 68 cents and bought 20,000 July 14 calls for 41 cents. The July 14 straddle, for $1.09 net debit, traded more than 40,000X Friday and Monday's open interest data indicate that new positions were opened. The same straddle traded again Monday. Shares lost 26 cents to $13.88 and 20,000 were bought for $1.10. The strategist bought July 14 puts for 65 cents and July 14 calls for 45 cents. The two days of premium buying In XLF seems to reflect expectations for heightened volatility in the sector for the next few weeks. The exchange-traded fund holds all of the financial-related names from the S&P 500.
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