Options Flow Summary: General Sentiment & Crocs Inc (CROX)
General Sentiment
We have seen a generally positive picture in the markets today with broad indexes up about Ω% at mid-afternoon, and the CBOE VIX sliding 7.45% to 22.50. Option trading is brisk, with nearly 4.5 million puts and 6 million calls on the tape. Volume is on pace for close to 14 million contracts.
Crocs Inc (CROX)
We continue to follow the action in this name which has pulled back nearly 45% from YTD highs near $75, and shed $6 yesterday in active trading to close at $41.45. Today the stock caught an early bounce up nearly $2.
The option flow suggested a large customer looking for a recovery as a one-by-two call spread traded with a buyer paying $6.60 for 1,500 Dec 40 calls while selling 3,000 Dec 50 calls for $2.45 on the ISE. This trade provides upside exposure from current price levels for a relatively low net premium. It does, however, expose the seller to unlimited losses were a major upside event beyond the $58 range occur.
The stock has struggled to hold gains and is currently close to unchanged. Overall option volume is nearly 75,000 contracts or double recent levels. Despite the large bullish 1x2, majority of flow involves sellers of the November 45 strike where more than 10,000 contracts have traded with a slight selling bias.
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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