Unusual Options Activity Review: PAAS, KFT, ODP, CROX, NFLX, DFS, SAP, HCBK, .VIX, SPY, QQQ, FXI
Unusual Options Activity Review For Tuesday, September 4, 2012
Tuesday's Bullish Trading
Pan American Silver (PAAS) added 67 cents to $18.27 after the price of silver gained 97 cents to $32.34 Tuesday (the price of gold rose $10 to $1695.5). Meanwhile, about 13,000 calls and 900 puts traded in PAAS, which is almost 3X the average daily options volume for the Vancouver-based miner. October 17 calls, which are already $1.27 in-the-money and are expiring in 45 days, were the most actives on the stock. 4,785 traded. October 18 and 20 calls saw interest as well. Silver prices have rallied more than $5 in the past month. Some players in the options market might be taking bullish positions in Pan American Silver on the view strength in the metal could potentially lift the company's profits and shares in the weeks ahead.
Bullish trading was also seen in Kraft Foods (KFT), Office Depot (ODP), and Crocs (CROX).
Tuesday's Bearish Trading
Netflix (NFLX) had a rough day. Shares lost $3.79 to $55.63 in very active trading of 12.4 million shares after rival Amazon.com disclosed an expanded instant video service with EPIX. NFLX shares dropped on concerns about the competitive pressures and options volume on the stock was 43,000 calls and 64,000 puts. Weekly 50 and 55 puts, which expire on 9/7, were the most actives in NFLX . Sep 50 and 55 puts were the next most actives. Meanwhile, implied volatility in the options on the stock was up 16.5 percent to 55.
Bearish trading was also seen in Discover (DFS), SAP, and Hudson City Bancorp (HCBK).
Overall options volumes picked up from last week's very slow pace. 6.3 million calls and 5.1 million puts traded across the exchanges, according to Trade Alert data. That's almost 40 percent more than Tuesday a week ago, when volume hit a 2012 low. Many players probably returned from vacation and an increase in market volatility might have motivated increasing volume as well. CBOE Volatility Index (.VIX) hit a high of 18.96 in the morning and finished up .51 to 17.98. Volume was light in the VIX pit, however. Just 148,000 calls and 108,000 puts traded on the volatility index, which is only 67 percent the average daily volume for the product.
Analyzing the ETF Market
It was a slow day in the exchange-traded funds market. While share volume was respectable at 901.5 million, 3.6 million options traded on the SPDR 500 Trust (SPY), Powershares QQQ (QQQ) and other ETFs, which is only about 80 percent of the recent average daily volume. The largest trade was in the iShares China Fund (FXI), which lost 61 cents to $32.46. A 56,570-contract block Feb 31 puts traded on FXI for $1.72 per contract on PHLX. The hefty premium traded customer-to-customer, according to a source on the exchange-floor. So, while one player appears to have taken the bullish view, the other was possibly taking the other, or bearish, side of the trade.
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