Mystery continues to dominate the options market as unusual options activity continues in the energy sector
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Back for More Calls in LinnCo LLC (LNCO)
More calls trade at the LNCO Sep 31 strike, which we highlighted two days ago.? A customer sold a touch over 5200 of the Sep 31 calls at .35 on the ISE.? With the monthly dividend in this stock, this is likely a stock holder that is long the underlying looking to collect the dividend and collect the income from call sales at the same time.?
In combining the .35 received to the dividend of almost a .25, the potential yield on the trade for the month is 5%.? Annualized that would be a 60% return if the div is consistent and the stock remains stable.??? The Vol on these is now down to 17% which is somewhat low for LNCO a few more of these call sales and a bull call purchase might begin to look favorable
Seeking the ORCL, for Income, That Is
A customer sold the ORCL Sep29 39 put at .53 just under 12,000 times.? This is likely another income sale similar to XLU.? The customer assuming that ORCL is going to stay above 39.00 a share between now and September 29th.? If that happens the customer is going to collect the .53 collected on the put sale.
It may be that he or she is willing to buy the stock for 39 less the .53 collected (38.47) if the stock does drop below that price.? Based on the duration of the trade that might be the case.? This trade should be considered bearish volatility and slightly bullish ORCL.
Mysterious Energy
In what continues to be a mystery, there was more upside call buying in the energy sector.? Today a trader bought, through a market sweep the regular September 40 calls in Southwestern Energy Company (SWN).? The customer paid .73 across all exchanges adding up to over 6,000 contracts.?
This was an opening trade and based on the duration and strike, this is likely a naked purchase, or at a minimum bullish leaning in delta.? This trade should be classified as aggressively bullish both volatility and the underlying.?
We continue to see activity across the utility and energy sector.?? Yesterday it was SUNE that saw upside call action.? Traders looking to piggy back could by the Sep 39 calls which from a vol perspective are cheaper than the 40 calls now.? A 39/40 call spread also has some favorable edge to it.