Unusual Options Activity Review: F, JBLU, NIHD, SYMC, MS, BAC, LF, CHRW, OVTI, .SPX, .VIX, FXI
Unusual Options Activity Review For Thursday, September 6, 2012
Thursday's Bullish Trading
Investors seemed revved up about the options on Ford Motor (F) Thursday. The stock was 34 cents to $9.91 in heavy trading of 65.8 million shares after the automaker announced plans to launch new vehicles in Europe over the next two years. The move is part of a plan to help cut losses and limit risk in the financially-troubled region. Shares jumped on the news and options volume in Ford was 191,000 calls and 74,000 puts. September 10 puts, which are now 9 cents out-of-the-money and expiring in a little more than two weeks, saw a flurry of activity. More than 74,000 traded. The Weekly and October 10 calls were the next most actives in Ford Thursday.
Bullish trading was also seen in Jet Blue (JBLU), NI Holdings (NIHD), and Symantec (SYMC).
Thursday's Bearish Trading
September 17 calls on Morgan Stanley (MS) were Thursday's second most actively traded equity options contract, falling just behind BofA's (BAC) Nov 9 calls. More than 113,000 MS Sep 17 calls changed hands. One player sold 50,000 contracts in the morning at 13 cents per contract. Later, another 10,000 were sold at 16 cents. MS finished the day up 57 cents to $16.25 and the writing of Sep 17 calls might reflect the view that the stock has limited upside from these levels in the short-term. Shares have already rallied nearly $2, or 11.7 percent, in less than two weeks. A shareholder with a large position in the stock might have initiated the premium sales as part of a covered call or over-write play on MS Thursday. 17 calls on MS are now 75 cents out-of-the-money and expiring in 15 days.
Bearish trading was also seen in Leapfrog (LF), CH Robinson (CHRW), and Omnivision Technologies (OVTI).
After several weeks of very light volume, more than 18 million options contracts traded Thursday. It was the highest amount of options activity since July 27. In the index market, more than 1.8 million options traded on the S&P 500 Index (.SPX), CBOE Volatility Index (.VIX), and other cash products. The flow included about 870,000 puts and 945,000 calls. The S&P 500 rallied 28.68 points to 1,432.12 and new multi-year closing highs. Meanwhile, VIX, which tracks the expected volatility priced into SPX options, fell 2.14 points to 15.60. VIX Sep 16 puts, Sep 20 calls, and Sep 14 puts were the most actively traded index options Thursday.
Analyzing the ETF Market
Large blocks of puts traded on the iShares China Fund (FXI) late-Thursday. Shares had suffered a one-month 8.1 percent slide prior to Thursday, but then bounced 56 cents to $32.73 on a day of strength across global equity markets. In options action, about 241,000 puts and 34,000 calls traded in FXI, which is more than 4X the daily average volume for the product. Much of the volume was due to one trade late, in which the investor sold 36,000 September 34 puts and sold 36,000 September 35 puts to buy 118,500 October 33 puts on FXI. Looking at the open interest, the activity appears to be rolling activity. That is, the investor is exiting a position in September in-the-money puts that expire in 15 days and opening a new bearish play in the October near-the-money put options that expire in 43 days.
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