Unusual Options Activity Review: FCX, SWY, COP, OC, .VIX, XLPKO, EL, LO
Unusual Options Activity Review For Friday, June 15, 2012
Friday's Bullish Trading
Credit Suisse (CS) gained 91 cents to close $18.88 on heavy trading of more than 4 million shares Friday. The stock is trying to recover some of the losses from the day before, when CS lost nearly 10 percent after the Swiss National Bank urged the company to raise more capital. The stock rebounded Friday, however, and options on the Swiss financial services giant are busy as well. July 19, July 20, and September 21 calls were the most actives, as some players might be anticipating a rebound in the stock ahead of Greek elections over the weekend and amid hopes that Central Banks will soon act (provide liquidity) to help stem some of the strains in the European financial system.
Bullish trading was also seen in Applied Materials (AMAT), Cablevision Systems (CVC), and GNC Holdings (GNC).
Friday's Bearish Trading
Freeport McMoran (FCX) had some unusual options activity Friday. Shares of the gold and copper miner were up 44 cents to close $34.34 in volume of almost 14.8 million shares. Options on the stock were busy. 58,000 calls and 57,000 puts traded, which is about double the normal pace. July 28 puts were the most actives and the flow includes a morning buyer of 15,000 contracts for 37 cents per contract, according to a source on the Chicago Board Options Exchange. Later, another 14,000 were bought for 37 cents. Total volume is now more than 31,000 against just 2,856 in open interest. FCX spent several months in a bearish funk before gaining almost 7 percent so far in June. July 28 puts are now 18.3 percent out-of-the-money and a large shareholder might be initiating the put buying to hedge the stock from the risk of another leg lower over the next 35 days. July options expire in five weeks.
Bearish trading was also seen in Safeway (SWY), Conoco Phillips(COP), and Owens Corning (OC).
CBOE Volatility Index (.VIX) was all over the map Friday, bouncing in and out of positive territory, before losing .57 to 21.11 on the day. Options on the index were actively traded. 293,000 calls and 366,000 puts traded in the VIX pit. 120,000 June 19 puts were sold on the index in morning trading. Open interest in VIX June 19 puts, which expire in four days, is more than 176,000 contracts and Friday's put seller might have liquidated a position on the view that VIX is not likely to fall on Monday and Tuesday after the weekend and ahead of the VIX expiration Wednesday. Later, however, an investor bought 38,000 VIX July 20 puts, a view that the index will settle below 20 at the July expiration. It is possible that one investor initiated both trades and was rolling out a bearish position in VIX from June to July.
Analyzing the ETF Market
US Natural Gas Fund SPDR Consumer Products Fund (XLP) was the subject of an interest trade Friday. Shares, which touched new 52-week highs of $34.62 Thursday, added 6 cents to $34.33 Friday and one investor apparently sold 27,000 July 31 puts on the ETF at 4 cents per contract to buy 27,000 July 36 calls at 4 cents. This July 31 ñ 36 bullish risk-reversal, at even money, appears to be a new position (because volume exceeds open interest in both contracts) and a view that XLP will continue its winning ways through mid-July. The ETF, which holds names like Coke (KO), Estee Lauder (EL) and Lorillard (LO), is up 5.5 percent year-to-date.
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