Unusual Options Activity Review for Wednesday, February 6, 2013
Wednesday’s Bullish Trading
International Game Technology (IGT) saw higher options volumes Wednesday, for the second time this week. 11,000 calls and 200 puts traded on the Las Vegas, NV maker of video gaming systems Monday and the flow created 6,600 contracts of new open interest in the April 17 calls on the stock. Shares rose 30 cents to $15.94 Wednesday and options volume was 6X the daily average. About 16,000 calls and 300 puts traded in IGT. April 18 calls were the most actives. 8,220 contracts traded against 424 in open interest. Another 3,500 April 17 calls also changed hands. It’s not clear what is motivating the increased interest in April call options on International Game Technology this week, but the overall flow seems to express confidence in the stock for the next few months. Shares have already rallied 42.3 percent off the 52-week lows six months ago.
Bullish trading was also seen in US Airways (LCC), Cemex (CX), and Millennial Media (MM).
Wednesday’s Bearish Trading
Sony (SNE) might be a name worth watching Thursday. The Japanese electronics giant is due to release earnings before the opening bell and trading in the options on the stock was busy heading into the report. Shares were down a penny to $15.82 Wednesday and options volume included 9,380 puts and 4,615 calls. February 15 puts, which are now 82 cents out-of-the-money and expiring in 9 days, saw a flurry of activity in afternoon action. Most of the traders were in smaller lots for 35 cents per contract when the market was 25 to 35 cents. At the end of the day, 5,893 Feb 15 puts traded on SNE against 2,012 in open interest, as some investors might have been buying the short-term puts ahead of the news to hedge the earnings event risk.
Bearish trading was also seen in Triquint Semi (TQNT), XL Capital (XL), and HCA.
Index Recap
Overall options volumes remain relatively light in early-February. In the index market, for example, about 567,000 calls and 604,000 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 finished up .83 to 1,512.12 and VIX, which tracks the implied volatility priced into SPX options, lost .31 to 13.41. However, the decline in implied volatility wasn’t market-wide and some of the individual equities were seeing higher IV Wednesday. For example, VXGOG, which tracks the implied vols of Google (GOOG) options, was up 1.06 to 21.24. VXAPL (Apple IV) rose 1.55 to 29.66 and VXIBM ticked up .61 to 16.83.
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