Options Flow Summary: General Sentiment & RAD
General Sentiment
It has been a generally positive market today, with the broad averages higher by nearly 1% in mid-afternoon. The total option volume is running near 80% of recent averages, with nearly 8 million contracts traded by 3pm.
We have seen 4.3 million calls versus 3.5 million puts on the tape. Call buyers are initiating the majority of the options trading.
Rite Aid (RAD)
The largest trade today, excluding dividend dilution trading in Altria, involved puts in Rite Aid options on the Amex at 2:44ET. In this trade, a large institutional client sold nearly 20,000 Jan-08 5 puts for $.55 tied to stock at $4.96.
With open interest of more than 159,000 contracts, and implied volatility of 45.5% in the option, this is likely closing a position opened last year in connection with credit positions.
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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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