Heavy Call Action in EXXI
EXXI trading 4.28 with an IV30 of 105.78 is seeing heavy call action today as a trader appears to be closing and rolling a call position.? A trader that was short 35810 of the Feb20 3 calls closed them paying 1.30 and against this call buy, the trader sold 35810 of the Mar20 4.5 calls.? This is against ADV of about 4,100 contracts.
This trade is likely tied to an underlying stock positon.? A trader that was selling call premium against a long saw EXXI take a nice rally from the January lows.? Although, the stock is still off massively in the last 6 months.
This trade should be considered neutral the underlying and bearish volatility.? Traders looking to piggy back this trade might consider the 4.5/5/5.5 call fly in March which could likely be bought for about .125.
?
Aggressive Call Buying in MHR
MHR trading 2.70 saw aggressive call buying on the Feb20 2.5 strike.? In a trade that MIGHT be a close, a trader bought 12,000 of the Feb 2.5 calls for .20.? On January 13th a trader sold 12,000 of the calls at .22 through auto execution.? ADV for this name is 2,800 contracts a day.
As the stock is up today, it is possible that the trader is opening and playing ?deltas? (trying to get long the underlying for cheap).
This trade should be considered bullish the underlying and bullish volatility on the week.? As this trader does trade in size I would be watching to see if the trader, if it is a close, moves to open a new call strike in march at the 2.5 or 3 strike.? If so there may be a volatility set up against it.? Stay tuned.
Choosing XSP over SPX
S&P 500 Mini-SPX options, essentially a cash settled SPX contract that is the same size as SPY.? Today a customer sold 21284 of the April regular 199 puts at 207, while closing 19071 of the Feb 199 puts for .03.? This is huge volume for this product.? Based on the size of the trade, it is curious that the trader chose to use XSP rather than the big contract. Average daily volume in XSP is 5732, which amounts to the equivalent of 570 SPX contracts.
It is possible that this is a part of an SMA (separately managed account), where this was many retail accounts signed up to a money manager that runs a put selling program, who, was looking for the potential tax benefits often associated with a cash settled index option.
This trade should be viewed as bullish the underlying and bearish volatility.