Options Flow Summary: General Sentiment, Western Digital (WDC) & Bank of New York(BK)
A busy Friday ends a volatile week that included a 10% correction and a 5% two-day rally. Options volume is on-track for 15 million contracts today, with calls leading puts in a mixed flow.
The level of fear in the markets has declined significantly since Monday. The current CBOE VIX is at a level of 22.81 versus Monday's jittery close 7 points higher.
Western Digital (WDC)
Unusual one-sided activity dominates WDC options today. We have seen triple the normal daily volume along with aggressive buying of the Jan 30 calls. This activity took place earlier today when the stock was near $28.40.
More than 11,000 of these calls have traded on the day, with the buyer paying up to $1.35 in opening customer activity. In addition, we saw implied volatility in the options rising from 40% to 45%.
WDC has since slid to $27.80 and the call buying has ceased. This suggests that this large customer's total picture is filled. Either that or the pullback in the stock may have tempered his desire for upside exposure.
Bank of New York (BK)
BK options are also trading at triple their normal levels. Consistent premium sellers are targeting the 45 and 47.5 strikes in Jan and March-08 options. BK stock is up nearly 2% to $48.26 and earnings are not expected until January.
By repeatedly hitting bids on the ISE, todayís sellers have knocked nearly 5 points of implied volatility out of these options. These sellers may believe that the elevated volatility experienced this fall has finally run its course.
Posted By: Trade Alert
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