Intra-Day Significant Options Activity
In the iShares MSCI Hong Kong Index (EWH, 15.83, +1.67%) opening investors bought 4,000 April 15 (.23d) puts paying $0.23. On Monday of this week, investors bought 3,000 of these same puts paying $0.55. These investors indicate a cautious sentiment and may be protecting long delta positions.
In the iShares S&P SmallCap 600 Index (IJR, 66.53, +0.45%) opening investors sold over 2,000 August 69 (.47d) calls at $2.50. These investors are likely selling these calls against long stock (over-writing), and foresee limited upside movement and/or a decrease in implied volatility heading into August expiration.
In the CBOE Volatility Index (VIX, 14.01, -1.96%) investors sold approximately 60,000 March 18/20 call spreads receiving from $0.175 down to $0.125. These investors are likely closing out of the majority of a position opening yesterday when participants bought 100,000 of these call spreads paying up to $0.20. VIX options expire on 4/21/07, versus the normal 4/17/07 expiration.
Surrounding this afternoon's weakness in Amgen Inc (AMGN, 60.95, -2.01%) investors stepped into the market place and proceeded to buy 25,000 March 60 (.38d) puts paying up to $0.60. With one week left to trade these options, the investors could be speculating on further downside movement ahead of expiration.
ENERGY - OIL
With takeover chatter circulating in Murphy Oil Corp (MUR, 52.79, +1.03%) we saw a surge in options activity. Over 4,000 March 55 (.22d) calls were bought by early this afternoon.
With unconfirmed takeover chatter circulating in Noble Corp (NE, 74.86, +2.86%) there is a significant amount of near term call buying. Over 16,000 calls are on the tape with the heaviest volume in the March 75 and 80 strikes. NE has a 21-day ADV of 2,500 calls.
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In the past month in Johnson and Johnson (JNJ, 62.23, +0.83%) we have seen investors get long volatility in July with an apparent upside bias. Today opening investors bought 6,000 July 65 (.37d) calls paying $1.30. About a month ago we saw large delta neutral buyers of the July 70 calls and we believe that investors are still long these positions.
REIT - MORTGAGES
Listed options in Redwood Trust Inc (RWT, 56.18, +1.81%) do not trade often, but today opening investors bought 750 July 55/50 put spreads paying $1.95. They could either be using the put spreads to aggressively hedge a long stock position or speculate that the stock will make a downside move towards the $50 level.
RETAIL - PHARMACY
Continuing a recent trend, CVS Corp. (CVS, 32.73, 1.0%) investors are buying volatility today in multiple months. With the stock trading at its highs of the week today, there is greater volume in the puts opposed to yesterday afternoon when investors bought a significant amount of March 32.5 and 35 calls. The March 32.5 puts were bought roughly 4,000 times this morning while there is similar volume in the August 30 and 32.5 puts. In other recent trading we have seen persistent April 30 put buyers (open interest is 30,000) as well as April 32.5 and 35 call buyers.
In Microchip Technology Inc (MCHP, 36.99, +0.82%) there are buyers of downside puts today. Specifically, opening investors bought 2,000 April 35 (.25d) puts getting long downside volatility in what could be cautious trading. MCHP pre-released earnings earlier this week on 3/5/07.
Alltel Corp (AT, 62.03, +3.1%) stock was approximately $61.48 this morning when aggressive call buying began in the March 60 and 65 calls and April 65 calls. On the day, the March calls have traded 4,000 times collectively, while investors bought roughly 2,000 April 65 calls paying up to $1.65. Additionally today, an investor bought 1,000 April 65 / 70 call spreads for $1.40. In addition to seemingly bullish bids in upside March and April calls recently we have seen primarily seen volatility buyers in the July options.
In Motorola (MOT, 18.45, -0.9%), we have seen predominantly bearish trading for at least the past two days. The April 17.5 (.75d) calls traded roughly 15,000 times today with investors selling them from $1.55 down to $1.30. Additionally, participants bought 5,000 April 17.5 puts for $0.35. Yesterday, investors actively sold April 17.5 and 20 calls and bought April and July 20 puts.
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