Tuesday’s Bullish Trading
Altera (ALTR), a San Jose, CA specialized semiconductor company, was the subject of unusual options activity Tuesday. The stock was up a penny to $34.57 in relatively active trading of 2.9 million shares. Meanwhile, 12,000 calls and 600 puts traded on the stock, which is 3X the daily average for the name. Most of the flow was concentrated in the June 34 calls, which are already 57 cents in-the-money. More than 10,200 traded against 3,179 in open interest. The top trade was a 3680-lot for $2.55 per contract when the market was $2.40 to $2.60 and appears to be an opening buyer. It’s not clear what motivated the increased options activity, as the stock saw relatively quiet action and there were no obvious headlines on the stock. Shares were up 3.2 percent and the best gainers in the S&P last Thursday on positive analyst commentary. The interest in Jun 34 calls might reflect optimism that ALTR can build on those gains over the next few months.
Bullish trading was also seen in Dollar General (DG), Standard Silver Resources (SSRI), and Tesoro (TSO).
Tuesday’s Bearish Trading
Conagra (CAG), the Omaha, NE food company, saw unusual options activity Tuesday. The stock was up 23 cents to $35.26 on relatively light volume of 2.45 million shares. At the same time, options volume was 7.5X the daily average. 9,050 puts and 635 calls traded in Conagra today. June 28 puts saw much of the flow. 5,520 contracts traded, including a 382-lot for 10 cents per contract when the market was 0 to 10 cents. Open interest is only 28 contracts and implied volatility was up 7 percent to 15. It’s not clear what was motivating the opening put activity in CAG. Some investors are possibly taking protective put positions against stock after a 19.5 percent year-to-date jump in Conagra shares. The company is due to report earning the morning of Apr 3.
Bearish trading was also seen in Lululemon Athletica (LULU), Keryx Pharmaceuticals (KERX), and Banco Santander (SAN).
Index Recap
Implied volatility was broadly higher across the options market for a second day and trading in the index market was active Tuesday. For example, CBOE Volatility Index (.VIX), which tracks the expected or implied volatility priced into S&P 500 Index (SPX) options, rallied 2.06 to 13.36 Monday and was up another 1.02 points to 14.38 today after the S&P dropped 3.76 points to 1,548.34. Trading in SPX, VIX and other index products totaled more than 2.3 million contracts, which is significantly better than the 1.7 million contracts of average daily volume seen in the past month, according to Trade Alert data. Much of the activity was in the VIX pit, as it was the last day to trade the March contract before a settlement value is computed Wednesday morning. 953,000 calls and 431,000 puts traded on the volatility index and of that number nearly 60 percent was in the March term.
Analyzing the ETF Market
Large blocks of options traded on the SPDR Financials (XLF) Tuesday. XLF, which represents ownership in shares of all of the financial-related names from the S&P 500, was down 10 cents to $18.16 and the biggest trade on the ETF was a 75,000-contract block of April 19 calls that traded electronically on the International Securities Exchange for 7 cents per contract. An investor sold the calls, to close a hefty position, according to data from ISE. The next biggest trade in XLF, which printed separately, was a 50,000 contract block of April 17 puts on XLF for 10 cents per contract. An investor bought a new position, according to ISEE data. At the end of the day, more than 102,000 XLF April 17 puts traded on the day, making it the second most active option Tuesday behind expiring VIX Mar 16 puts.
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