This Morning’s Bullish Trading
A hefty spread trades in Facebook (FB) Tuesday. The stock is up another 77 cents, or 1.4 percent, to $54.59 and notched new record highs of $55.18 earlier in the day. The big options trades on the social media company printed early in the session when an investor apparently sold 40,000 January 50 calls on FB at $5.65 per contract and bought 51,600 February 55 calls for $4.60. Looking at open interest and trade history, the activity in the Feb 55 calls appears to be a new position while the Jan 50s are possibly closing a position opened last week when the stock was around $50 per share and 40,000 Jan 50 calls on FB traded for $2.40 apiece. If so, the investor is monetizing the gain in the January 50s and positioning for further strength in Facebook by purchasing the Feb 55 calls.
Williams Companies (WMB) adds $1.02, or 2.9 percent, to $36.35 on increasing volume of 11 million shares after a filing showed activist investor Corvex taking a 5.28 percent stake in the natural gas producer. Options on the stock are seeing brisk trading as well. Roughly 87,000 calls and 4,600 puts so far. The top trades are part of spread after, according to a source on the exchange floor, the investor was selling 9,600 January 35 calls on WMB at $2.37 and buying 19,200 February 39 calls for 88 cents each. Looking at trade history, the Jan 35 calls appear to be closing while the Feb 39s open. If so, this 1X2 call ratio spread is a roll out from Jan to Feb and up four strikes and the adjustment is expressing confidence in the name for the months ahead.
This Morning’s Bearish Trading
Ford Motor (F) sees higher options volume. The stock is down 6 cents to $16.80 and options volume on the stock heading into midday is about 101,000 puts and 50,000 calls. Most (80%) of the put volume is in the December term, which are expiring at the end of this week. Dec 16.5 puts are the most actively traded. 47,310 traded against 7,463 in open interest. Another 34,023 Ford Dec 17 puts also changed hands Tuesday. It?s not clear what is motivating the activity, as there are no immediate headlines on the automaker today. For whatever reason, some investors seem to be expressing concerns that shares might fall in the days ahead.
Winstream (WIN), a Little Rock, AR telecomm, is up 4 cents to $8 and options volume on the stock is running 7X the daily average. The flow is heavily concentrated in February 7 puts. 9,580 contracts traded against 256 in open interest. The largest trade is a 1,421-contract block for 14 cents per contract just after the opening bell when the market was 10 to 14 cents. The stock is down 3.4 percent year-to-date and the interest in Feb 7 puts on WIN might be reflecting concerns that shares will continue to underperform in the first couple months of 2014.