Unusual Options Activity Review: PFE, FMCN, YHOO, BMY, JEF, HRB, CAKE, CECO, .VIX, .OEX, .SPX, GLD
Unusual Options Activity Review For Thursday, September 22, 2011
Bullish Trading
An interesting trade surfaced in Pfizer's (PFE) long-term options Thursday. Shares closed down 35 cents to finish $17.49 and among thirty Dow stocks moving lower. The entire Dow thirty were under water, as stock fundamentals seem to be taking a backseat to macroeconomic concerns. In options action, one player was focused on Pfizer 2013 options and apparently sold 7,500 January 2013 12.5 puts at 94 cents to buy 7,500 January 2013 22.5 calls at 58 cents. In other words, a Jan13 12.5 ñ 22.5 bullish risk-reversal is initiated for a 36-cent credit. The strategist might have a bullish longer-term view on the stock, but rather than buying shares, they're initiating an options combo instead. They're also a likely buyer of the stock at $12.50 (-28.5%) if shares fall below that level before the Jan 2013 expiration.
Bearish trading was also seen in Focus Media (FMCN), Yahoo (YHOO), and Bristol Meyers (BMY).
Bearish Trading
Jefferies (JEF) traded down Thursday and put volume was up on a Bloomberg report the company's CEO sold 2 million shares of stock for roughly $25 million. Shares touched new 52-week lows and closed down 48 cents to finish $12.37 on the news. Meanwhile, 7,544 puts and 300 calls traded in Jefferies. November 10 puts are the most actives. 4,475 traded (71 percent Ask) against no existing open interest. Looks like opening put buying, probably reflecting concerns JEF will dive below $10 through the November expiration.
Bearish trading was also seen in H&R Block (HRB), Cheesecake Factory (CAKE), and Career Education (CECO).
Index Recap
CBOE Volatility Index (.VIX) is rallying amid active trading in the index market Thursday. 755,000 calls and 1.13 million puts traded across the VIX, S&P 100 Index (.OEX) and other index products. A good percentage of the volume is in the CBOE's S&P 500 Index (.SPX) options pit. The S&P 500 Index is down 37.20 points to 1,129.56 and options volume on the product includes 272,000 calls and 751,000 puts. Nervous investors are buying puts on the index to hedge downside risk and VIX, which tracks the expected volatility priced into S&P 500 Index options, closed up 4.03 points to finish 41.35. VIX is now about 14 percent below the 15-month high of 48 set on 8/8. 390,000 calls and 203,000 traded on the volatility index itself.
Analyzing the ETF Market
SPDR Gold Trust (GLD) lost $4.54 to finish $169.05 on a tough day for gold. Options action in the gold ETF was brisk Thursday and includes 355,000 calls/200,000 puts. The top trades of the day are part of a spread, in which the strategist sold 25,000 October 190 ñ 200 call spreads at 45 cents and bought 25,000 December 200 calls at $2.08. The activity looks like rolling activity out of October and to December. The strategist might have had a bullish view on gold through October, but is now buying an additional two months for the trade to play out.
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About Joseph Cusick
Joseph Cusick currently serves as the Senior Vice President of Education and a Senior Market Analyst for optionsXpress. Mr. Cusick seeks out common sense and technologically scalable educational pathways for self-directed investors of all experience levels. He is largely responsible for ramping up delivery of online and offline seminars to customers and potential clients worldwide. Prior to serving in his current role, Mr. Cusick immersed himself in the broker side of optionsXpress by managing his own book of business. Prior to joining optionsXpress, Mr. Cusick served as a market maker and portfolio manager at the Chicago Board of Options Exchange. Joseph is a graduate of Marquette University and holds his Series 4, 7 and 63 registrations with FINRA.
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