The customer is either hedging a long or is betting that EEM is going to fall by more than 10% in the next 3 months or so.?
Big Call Spreads in T
AT&T Inc. trading around 33.85 saw a large call spread trade.? A customer bought 30,000 of the Dec 34 calls for .30 and against it sold 30,000 of the Dec 35 calls net buying the Dec 34/35 for .23.? The trade was done as one large block thus is it was likely crossed.
This trade has a short duration of only 2 weeks and should be viewed as aggressively bullish T over the next two weeks in both volatility and price.? ADV for this name is 31,500, so the stock has already more than doubled ADV.
Traders looking to piggy back might consider selling the Dec 33.5 puts at 2.9 against this spread thus owning a modified risk reversal for a credit.
Covered Calls in AMAT
Earlier Applied Materials Inc. was trading at 24.37 when two large block trades executed likely tied to stock.? A customer appears to have covered an existing short position buying 16,000 of the AMAT April 23 call for 2.55.? Against it the trader sold just over 23,000 of the April 25 calls at 1.50.? With the amount of open interest on the 23 strike this is likely a roll of a covered call position.
ADV for this name is about 20000 contracts a day so the stock has already doubled its daily volume
This trade is mildly bullish the underlying and bearish implied volatility.? Traders looking to piggy back might look to trade the 25/27 call spread paying about .70 for the spread.
Betting on a Fall in EEM
When EEM was trading at 40.75 a customer bought 20,000 of the MAR 39 puts paying 1.07 and sold the Mar 35 puts at /32 creating a long Mar 39/35? put spread paying? a net of .65 (about a .01 inside the b-a spread).? This appears to be untied.
EEM has an ADV of 120,000 contracts and has already exceeded that number.
The customer is either hedging a long or is betting that EEM is going to fall by more than 10% in the next 3 months or so.? This trade should be viewed as bullish volatility and likely bearish EEM.? Traders looking to piggy back could consider a tighter spread with a shorter duration in January of Feb.