Unusual Options Activity Review for Friday, May 31, 2013
Friday’s Bullish Trading
Intel (INTC) adds 29 cents to $24.50 in active trading of 32.5 million shares and is one of 10 Dow stocks holding gains in the final hour of trading Friday. The stock opened higher and is seeing relative strength today on reports Samsung picked Intel to supply chips to an Android tablet. Options on the world’s largest chipmaker are seeing brisk trading as well. 100,000 calls and 42,000 puts so far. June 26 calls, which are $1.50 out-of-the-money and expiring in three weeks, are the most active. 20,950 contracts changed hands. Weekly 25 calls (expiring next week), Jun 25 calls, and the expiring Weekly 24.5 calls are the next most actives.
Bullish trading was also seen in HMA, Cameco (CCJ), and STEC.
Friday’s Bearish Trading
UAL Corp (UAL) drops 9 cents to $32.55 and options on the airliner are seeing lopsided action, as about 10,000 puts and 900 calls traded in the name so far. The largest trade is a 4,300-contract block of Jul 27 puts traded for 38 cents per contract when the market was 35 to 39 cents. 5,160 contracts now traded against just 3 in open interest. July 27 puts on UAL are now 17 percent out-of-the-money and expiring in 7 weeks. Some investors are possibly buying puts against stock to help hedge recent gains in UAL. Shares are up nearly 40 percent year-to-date.
Bearish trading was also seen in Delta (DAL), Groupon (GRPN), and Atmel (ATML).
Index Recap
CBOE Volatility Index (.VIX) saw a late day lift and is set to close at its best levels in more than a month. The market’s “fear gauge” hit a morning low of 14.36 and moved in a range before seeing a late-day run higher and is now up .84 to 15.37. The rise in the VIX comes amid increasing volatility across various financial markets Friday, with bonds down on economic data ,crude and gold also lower, and global equity markets (see today’s ETF commentary) falling as well. VIX is reacting, but trading in the options on the index is light today. 160,000 calls and 125,000 puts traded in the VIX pit, which is less than two-thirds the normal volume today; according to Trade Alert data.
Analyzing the ETF Market
iShares Brazil Fund (EWZ) and iShares Emerging Markets Fund (EEM) are under pressure and implied volatility in the options on the two ETFs is moving higher today. EWZ dropped 3.1 percent to $50.75 and options volume on the fund is about 50,000 puts and 25,000 calls. Implied volatility in the ETF, as measured by the VXEWZ Index, rose 2.91 points to 26.58. Meanwhile, EEM is off 1.7 percent to $41.25. 290,000 puts and 75,000 calls traded on the emerging markets fund and IV, as measured by VX EEM, is up 2 points to 23.47. Higher put volumes and increased implied volatility in the two ETFs seems to reflect some underlying investor anxiety about the short-term outlook for global financial markets.
——————————————————————————————–
Disclaimers
This article is provided for informational purposes only. No statement in this article should be construed as a recommendation to buy or sell a security or to provide investment advice. The content provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy and completeness. optionsXpress makes every effort to provide timely information to its recipients but cannot guarantee specific delivery times due to factors beyond our control.
Derivatives involve substantial risk and are not appropriate for all investors. Please read the “Disclosure Statement for Futures and Options” prior to investing in futures or options.
For investments using a straddle or strangle options strategy the potential loss is unlimited. Multi-leg option strategies are subject to multiple commissions. Profits may be eroded by the commission expended to open and close the positions and other risks apply.