Unusual Options Activity Review for Monday, February 4, 2013
Monday’s Bullish Trading
Blackberry (BBRY) saw strength on its first day of trading under its new name and new ticker symbol. The company launched its Blackberry 10 device last week and announced that it was changing its name from Research In Motion (ticker: RIMM) at that time. The stock rallied $1.96 to $14.98 Monday in active trading 82 million shares, with help from an analyst upgrade. Trading in the options on BBRY was busy as well. About 154,000 calls and 93,000 puts traded in the name. February 16 calls, which are $1.02 out-of-the-money and expiring in 11 days, were the most active. 11,356 traded. February 15, Weekly 14, Weekly 14.5, and Weekly 15 calls on BBRY were busy as well.
Bullish trading was also seen in Las Vegas Sands (LVS), Expediters International of Washington (EXPD), and Allstate (ALL).
Monday’s Bearish Trading
It was a rough day for McGraw Hills (MHP) shareholders. The stock started falling in afternoon action amid crossing headlines that Standard & Poor’s is likely to face civil charges in connection with mortgage bond ratings. MHP dropped $8.04 to $50.40 on the day and peer Moody’s (MCO) gave up $5.90 to $49.45. Trading was brisk. More than 18 million shares traded in McGraw Hills. By way of comparison, average daily volume is about 2 million. Meanwhile, 10,000 puts and 2,500 calls traded on the ticker. Average daily volume is about 188 contracts. February 50 and 55 puts were the most actives and implied volatility in MHP options jumped 160 percent to 53.
Bearish trading was also seen in Corrections Corp of America (CXW), Moody’s (MCO), and Saks (SKS).
Index Recap
Implied volatility moved sharply higher across much of the options market Monday, but volumes were light. In the index market, for example, about 468,000 calls and 685,000 puts traded on the S&P 500 Index (.SPX), CBOE Volatility Index (.VIX), and other cash indexes, which is only about 70 percent of the recent daily average volume, according to Trade Alert data. The S&P lost 17.46 points to 1,495.71 and VIX, which tracks the implied volatility priced into SPX options, rallied 1.77 points to 14.67 and has now jumped 18 percent over the past two weeks. VIX February and March $14 puts were the most actively index contracts of the day, followed by the SPX Feb 1450 put option.
Analyzing the ETF Market
PowerShares Bullish Dollar Fund (UUP) finished up .11 to 21.71 and options volume on the ETF was 3X the daily average. The exchange-traded fund tracks the performance of the dollar against a basket of other foreign currencies, but is heavily-weighted towards the EUR/USD pair. The euro dropped .9 percent to 1.352 against the dollar Monday. Meanwhile, UUP ticked higher and options volume on the ETF was lopsided. 13,000 calls and 660 puts traded in the product. June 21 and March 22 calls were the most actives, as some investors might have been taking positions on the view the dollar will continue to strengthen against other key currencies, particularly the euro, in the weeks/months ahead.
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