Unusual Options Activity Review - CHS, LVLT, MU, SIRI, CAGC, WFC, CIEN, SM, .VIX, .SPX, .VIX, .SPX
Unusual Options Activity Review For Wednesday, February 16, 2011
Bullish Flow
Chico's FAS (CHS) has seen bullish options order flow this week. The action started Tuesday amid increasing interest in March and May 13 call options. Shares of the retailer added 31 cents to $12.35 and the action continued Wednesday. 6,320 calls and 140 puts traded in the name, or 4X the average daily levels. March 14 calls, which are $1.65 out-of-the-money, were the most actives. 2,564 traded. March 13 and February 12.5 calls saw interest as well. In addition, of the day's total call volume, 83 percent traded at the Ask, according to data from web site Whatstrading.com. The heavy trading at the offer is a sign of buying interest. The two days of bullish trading comes amid unsubstantiated speculation that a private equity firm is eyeing Chico's, which might have gained some credibility today after Family Dollar Stores was the subject of a bid.
Bullish trading was also seen in Level 3 (LVLT), Micron Technology (MU), and Sirius Satellite (SIRI).
Bearish Flow
China Agritech (CAGC) is back under pressure. Shares of the Chinese chemical company have been under pressure in recent weeks following negative newsletter and brokerage commentary. The selling gathered momentum today, as shares sank to a new 52-week low and lost $1.77 to $7.44 on the session. CAGC is now down 43.6 percent since January 6. Meanwhile, options volume Wednesday included 15,000 puts and 5,760 call options. February 7.5 puts were the most actives. Feb 6 puts, Feb 7.5 calls and Feb 10 puts saw some interest as well. Meanwhile, implied volatility surged 65 percent to 150, as
Bearish flow also surfaced in Wells Fargo (WFC), Ciena (CIEN), and SM Energy Corp (SM).
Index Trading
The CBOE Volatility Index (.VIX) ticked higher even after the S&P 500 Index (.SPX) added 8.21 points to 1,336.32. VIX, which tracks the expected volatility priced into SPX options, normal moves lower when the S&P 500 gains ground. Yet, Wednesday, the volatility index added .35 to 16.72 and might be "pricing in" the possibility for increasing volatility around the options expiration. The last day to trade stock and ETF February options is Friday. February options on many index products stop trading tomorrow. Volume is already picking up. 729,000 calls and 1 million puts traded across SPX, VIX and other cash-settled indexes Wednesdayday, which is 1.5X the recent average daily volume.
ETF Trading
A correction to yesterday's note on the Financial Select Sector Fund (XLF) strangle color. We noted that 100,000 May 15 puts traded at 19 cents and 100,000 May 19 calls at 19 cents to create a May 15 ñ 19 strangle at 32 cents. Oooops. The May 19 calls actually traded at 13 cents. Thanks to the observant reader that pointed out the error. In today's trading, the iShares Xinhua China Fund (FXI) saw more action that usual. Shares added 51 cents to $42.31 and options volume rose to 4X the average daily. 246,000 calls and 62,000 puts traded in the ETF. January 60 calls were the most actives. 51,340 contracts changed hands, including a buyer of 50,000 contracts at 26 cents each. They must be looking for a dramatic rally in China's equity markets. The contract is 41.8 percent out-of-the-money.
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