Unusual Options Activity Review: BX, SYY, RVBD, P, CRUS, APOL, CECO, LVLT, .SPX, .VIX, SPY
Thursday's Bullish Trading
Blackstone Group (BX) lost 70 cents to $14.14 in active trading of 5.7 million shares after the New York-based asset manager posted disappointing quarterly earnings numbers Thursday. Options on the stock were busy as well. 59,000 calls and 4,300 puts traded in the name, which is 14X the daily average. Much of the call activity was due to one spread trade, in which the investor apparently sold 21,000 January 15 calls on BX at $1.14 per contract and bought 29,700 January 2014 $20 calls for 84 cents per contract. This diagonal ratio spread might roll a bullish position out one year and up 5 strike prices. It seems to express the view that the stock is likely to remain below $15 through January 2013, but then perhaps climb to more than $20 by January 2014. The stock has had a rough stretch in recent weeks and is now down 10.6 percent since January. A 52-week high of $19.49 per share dates back to April of last year.
Bullish trading was also seen in Sysco (SYY), Riverbed Technology (RVBD), and Pandora (P).
Thursday's Bearish Trading
Cirrus Logic (CRUS) shares moved down 89 cents to $22.96 in active trading of 2.3 million shares and implied volatility in the options on the chipmaker moved higher on increasing put volume Thursday. 7,735 puts and 1,400 calls traded in Cirrus options. The activity was in smaller sizes. The top trade was a 568-lot of May 24 puts traded on the $1.70 asking price. 2,720 CRUS March 24 puts changed hands total. May 21 and 22 puts were busy as well and levels of implied volatility in the options stock rose 18 percent to 58.5. The stock performed well during the first few months of the year and is up 45 percent year-to-date. The apparent put buying might be designed to help hedge recent profits in the stock ahead of the company's April 25 earnings release.
Bearish trading was also seen in Apollo (APOL), Career Education (CECO), and Level 3 (LVLT).
Index Recap
It was a busy day in the S&P 500 Index (.SPX) pit on the Chicago Board Options Exchange. Thursday was the last day to trade April options on the index before a settlement value is computed Friday morning. The index lost 8.22 points to 1,376.92 and volume in SPX options was 660,000 puts/389,000 calls. April 1,400 puts and calls were the day's most active index contracts. The index spent a lot of time in March and early-April bouncing around the 1,400 level and there is substantial open interest in 1400 puts and calls on the index. Investors were likely selling to close positions in the April 1400s before the contracts expire. Consequently, CBOE Volatility Index (.VIX), which tracks the expected volatility priced into S&P 500 Index options, edged down .28 to 18.36. VIX typically moves higher when the S&P 500 moves lower, but not Thursday. The volatility index was perhaps being influenced by the heavy selling of SPX premium due to expiration.
Analyzing the ETF Market
Trading was heavy in the SPDR 500 Trust (SPY) Thursday as well. While SPX is a cash-settled index that holds five hundred large publicly-traded companies, SPY is an exchange-traded fund that holds the same 500 names. Unlike SPX, which is simply an index or barometer, SPY can be bought and sold throughout the trading day like shares of stock. Volume in the SPY, or so-called "SPYder", Thursday approached 200 million shares. Meanwhile, 2 million puts and 1 million calls traded in the product. Of the 3 million contracts traded, about 1.75 million, or 58.3 percent, were front-month April options, which expire after Friday. Shares lost 89 cents to $137.72 and the April 136, 137, and 138 puts were the most actives.
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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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