Tied to stock, paper bought 10,000 TXN Jul 77.5 calls delta neutral on a 56 delta.
Texas Instruments Inc., trading 78.46 up .62 with an IV30 of 23.77 and an HV10 of 8.71, reports earnings on April 25.? A customer bought tied to stock, delta neutral on a 56 delta, 10,000 of the July 77.5 calls paying 3.65 in what appears to be the building of a synthetic straddle position in July.? TXN has an ADV of about 9,000 contracts and open interest of 200,000, so this is not a small trade in the stock and based on the OI this is an opening trade.
This trade is likely one of 2 positions.
- The simple and likely scenario is that this is a trader that is putting on a synthetic straddle to get long volatility in TXN out to July.
- This could also be a trader that is replacing stock with calls. In selling 560,000 shares of stock and buying 10,000 calls the trader could be reducing a long position, BUT actually using the leverage to potentially increase his or her exposure if he or she is right.
This trade should be considered neutral the underlying and aggressively bullish TXN volatility.