Unusual Options Activity Review: PCS, LEAP, X, CTRP, GFI, HAS, INTC, NRG, SPX, VIX, XLF

Posted January 3rd, 2012 by Joseph Cusick in Unusual Activity

Unusual Options Activity Review For Friday, December 30, 2011

Bullish Trading
MetroPCS Communications (PCS) is up 41 cents to $8.65 and options volume on the Richardson, TX wireless company is running 30X the daily average. 23,000 calls and 370 puts traded on the stock so far. January $9 call options, which are now 4 percent out-of-the-money and expire in three weeks, are the most actives. 16,100 changed hands. January 7.5 and 10 calls are active as well. There are no headlines on the stock, but today's call buyers might be reacting to comments from a JP Morgan analyst yesterday. The firm believes that PCS is a possible acquisition target. The research note also mentioned LEAP Wireless, which is seeing a flurry of call activity today as well (see today's Implied Volatility mover section in the midday report).

Bullish trading was also seen in LEAP Wireless (LEAP), US Steel (X), and Ctrip (CTRP).

Bearish Trading
Gold Fields (GFI) is flat at $15.27, even as gold gains $25 to $1566 per ounce today. Gold was up about 10 percent on the year. Yet, shares of Gold Fields, a South African gold miner, are down 12.4 percent over the past two months and off 15.8 percent year-to-date. In addition, some players in the options market seem to be bracing for additional losses in early-2012. Roughly 5,900 puts and 880 calls traded on the stock so far today. July 12 puts, which are 21.4 percent out-of-the-money, are the most actives. 1,490 traded and, with 82 percent of the flow trading at the ask, it appears that put buyers are dominating the action. Feb 11, Feb 12, Feb 13 and April 13 puts on Gold Fields are seeing interest as well.

Bearish trading was also seen in Hasbro (HAS), Intel (INTC), and NRG Energy (NRG).

Index Recap
Overall volume totals are very light today. 147,000 calls and 190,000 puts traded on the S&P 500 Index (SPX), the VIX, and other cash products, which is only 37 percent the average daily volume for the index market, according to Trade Alert data. The S&P 500 is down about 5 points on the week and roughly unchanged year-to-date. Action will likely pick up to start the New Year Tuesday. Indeed, VIX, which tracks the expected volatility priced into S&P 500 options, is up .56 points to 23.21 today and has added about 12 percent on the week. This week's rise in the VIX comes ahead of key event risk next week, which includes the ongoing European debt saga, monthly retail same store sales results and a host of data on the economic calendar ñ including key monthly jobs data on Friday.

Analyzing the ETF Market
Large blocks of call options traded on the Select Sector Financial Fund (XLF) today. Shares lost 3 cents to $13.04 and total volume in the ETF is 198,000 calls and 48,000 puts. One player bought a 50,000-contract block of January $14 calls for 7 cents per contract on the AMEX in morning trading. Another 46,000-block of January $13 calls traded for 38 cents per contract on the International Securities Exchange when the market was 37 to 38 cents. More than 63,000 Jan 14 calls now traded on XLF. Another 67,000 Jan 13s changed hands. Some players might be buying at-the-money and out-of-the-money calls on the XLF amid hopes for a rebound in the financials after the New Year. XLF, which holds all of the financial-related names from the S&P 500, has underperformed badly in 2011 ñ down 18.3 percent year-to-date.

------------------------------------------------------------------------

Disclaimers
This article is provided for informational purposes only. No statementin this article should be construed as a recommendation to buy or sell asecurity or to provide investment advice. The content provided has beenobtained from sources deemed reliable but is not guaranteed as toaccuracy and completeness. optionsXpress makes every effort to providetimely information to its recipients but cannot guarantee specificdelivery times due to factors beyond our control.

Derivatives involve substantial risk and are not appropriate for all investors. Please read the "Disclosure Statement for Futures and Options" prior to investing in futures or options.

For investments using a straddle or strangle options strategy thepotential loss is unlimited. Multi-leg option strategies are subject tomultiple commissions. Profits may be eroded by the commission expendedto open and close the positions and other risks apply.

"

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.

View Joseph Cusick's post archive >