Mid-Day Options Order Flow: General Sentiment, Intel (INTC) & Crocs Inc. (CROX)
General Sentiment
It's another active day in the options market. The broad market is selling off as investors choose to lock in gains from the recent all-time highs. At midday, broad indexes are down nearly 1% and the CBOE VIX is up to just over 19.3.
Activity in calls outnumbers put activity by nearly 1 million contracts. In addition, the directional bias is slightly bearish with 34% of the single stock activity involving call selling and put buying.
Intel (INTC)
Options on Intel are the most active among companies announcing earnings this week. The stock is trading up nearly 2% to $26.00 and the October 25 Calls are trading very actively.
Just over 20,000 contracts have changed hands so far today, with the majority being purchased in relatively small chunks of 1000 or less. This small-lot activity suggests a large retail component to the flow. With earnings scheduled for tomorrow afternoon, professionals might view this flow as a bearish indicator.
Crocs Inc (CROX)
CROX is up nearly 4% today and the options are trading at nearly 4 times their average daily pace of 23,000 contracts. The flow is decidedly bullish, with consistent buyers of October 70 calls and sellers of October 70 puts. Buyers are also active in the Nov 70, 75, and 80 strike calls. This activity includes the use of aggressive multi-market sweep orders to maximize liquidity.
Earnings are expected in early November, putting the October 70s outside of that timeline. Traders appear to be positioning for either a news event or a sympathy rally as the earnings season progresses.
Implied vols are in the 80% range, suggesting that 5% daily moves are to be expected. As the debate continues between short-sellers and true believers in the CROX product line, the stock is likely to provide interesting activity well into the holiday season.
Posted By: Trade Alert
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About Henry Schwartz
Henry Schwartz has traded derivatives on US and European exchanges for nearly 20 years. His experience includes market-making and institutional trading at the Hull Group, Salomon Brothers, Bear Stearns and most recently Banc of America Securities, where he led the electronic market-making project coincident with the launch of the ISE. His current work involves real-time stream analysis of options market activity for a number of leading institutional sell-side firms.
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