Today traders are buying the SO Jan 49 puts in bulk. ?They began paying .23 and have run them up to .30 a contract.?
Diagonal Ratio Trade in XLY
The Consumer Discretionary SPDR saw a ratio diagonal trade earlier today when a trader sold 10,000of the Jan 27 calls collecting 0.95. Then against it, the trader bought 15,000 of the March 75 calls paying 0.79.? Net the trader had a small debit of about .235 a spread.? Both trades appear to be opening trades.
This trade is likely with stock and appears to be play on January? being weaker but the market showing strength through most of the 1st quarter.? It also would quickly pick up long market exposure on an extended rally.? This trade should be considered neutral the market in the near term, but long the market and volatility into the end of the 1st quarter of 2015.
Traders looking to piggy back could buy the March 75/77/79 fly for a small debit, this would give the trader a similar risk profile for the next few weeks.
Bullish Butterfly in GG
Goldcorp Inc. was trading at 18.35 today when a trader executed a bullish butterfly.? The trader bought 5,000 of the Jan 20 calls for 2.46, sold 10,000 of the Jan 30 calls at .58, and bought 5,000 of the Jan 2016 40 calls for .20.? Net the trader bought the 20/30/40 bull call fly for 1.5.
This trade is a play on the underlying rallying as far as 12 points between now and January 2016 expiration.? This is likely way to lessen the cost of owning the Jan 20 calls.? This trade should be considered bullish the underlying and neutral volatility.? It is a play on the underlying rallying and a maybe the gold miners finally finding a bottom.
Traders looking to piggy back could look at a similar trade using the 37 calls instead of the 40s,? the cost is an extra .10 or so and then the trade cannot ?overshoot? a rally in the underlying.
Aggressively Bearish Put Buying in SO
Southern Co trading 50.53 with a vol of 16.45 (up 2.15%).? Today traders are buying, through the system, the January 49 puts in bulk.? They began paying .23 and have run them up to .30 a contract.? So far just under 9000 of them have traded in blocks of 100 to almost 1000.?
A trade like this points toward one of two things,? a terrified stock holder who is afraid of an immediate sell off, or a trader that is betting on the underlying falling. Either way this trade should be considered aggressively bearish the underlying and aggressively bullish volatility.
Traders looking to piggy back could buy the Jan-Feb 48 put spread for .40 which has bearish exposure and gets the trader long the what appears to be an earnings month.