Options Flow Summary: General Sentiment, AAPL, INTC & DELL
General Sentiment
It has been a bit of a whipsaw morning. It started out with a down opening followed by a quick rally and then to unchanged. There has been relatively light volume with close to 5 million contracts traded by midday. The CBOE VIX is up 2% to 24.32 and the flow is generally characterized by buyers seeking upside and at-the-money calls.
Information Technology Sector (AAPL, INTC, DELL)
A number of IT names are active today, most notably Apple, Intel, and Dell. The flow in Apple is relatively bullish, with aggressive buyers in the 135, 140 and 145 strike calls. The stock is up 2.5% to the $137 range, and more than 25,000 Sep 135 calls have traded as the stock has climbed. Early buyers paid $4.50 this morning with the stock near $133.50. This was followed by a sweep of 2500 for $5.20 as the stock began to climb with the market. They are currently trading near $7.00.
Intel and Dell options are trading with more of a defensive bias. Dell has earnings today post-close, and the options activity is concentrated as sellers hit the September 27.5 calls for nearly 15,000 on the day. The stock is trading near $28.33. These sellers will gain the most if the stock reaction is negative without being so severe as to shock implied volatility higher.
Intel activity shows general premium buyers at the 25 Strike in September options and longer dated call sellers at the 27.5 Strike. September 25 puts are currently $.50 out of the money and more than 13,000 have traded with buyers leading the flow. We are also seeing moderate selling in October and Jan-08 27.5 calls.
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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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