Monday’s Bullish Trading
CBOE Holdings (CBOE), owner of the Chicago Board Options Exchange [CBOE], hit new record highs today and is up 33 cents to $39.64 after the US Supreme Court rejected a request for an appeal related to the exclusive listing of certain index contracts, like the popular S&P 500 Index (.SPX) options. The International Securities Exchange [ISE], a competitor to CBOE, had asked the court to consider the matter on hopes it too could begin listing SPX and certain other index products. The Supreme Court denied the appeal. CBOE shares are higher on the news and options volume is running 2.5X the daily average. 5,540 calls and 710 puts on the stock so far. May and September 40 calls are the most active on CBOE Holdings today.
Bullish trading was also seen in Molycorp (MCP), Apollo Investment Group (AINV), and MEMC Electronics (WFR).
Monday’s Bearish Trading
Kroger (KR), the Cincinnati, OH grocery store chain, is down 42 cents to $33.92 and seeing relative weakness Monday (other names in the space, SVU, SWY, and WFM, are ticking higher). On the options front, some investors are possibly bracing for further losses in Kroger shares. 6,100 puts and 900 calls traded on the stock, which is 3.5X the daily average. June 33 puts are the most active. 5,700 contracts traded, including a buyer of 5,000 contracts for 70 cents each. Open interest at that strike is 419. It’s not clear what is motivating the activity, but the higher put volume and relative weakness in the shares seems to be expressing a cautious outlook for Kroger.
Bearish trading was also seen in Bridgepoint Education (BPI), JOS Bank (JOSB), and American Towers (AMT).
Index Recap
Trading in the options market is a bit slow to start the week. With 25 minutes left to trade, about 490,000 calls and 463,000 puts traded on the S&P 500 Index (.SPX), CBOE Volatility Index (.VIX), and other cash indexes, which is only about 65 percent of the recent average daily volume for the index market, according to Trade Alert data. The S&P 500 has traded in a 10-point range and is down just .64 pints to 1,633.06. Only 245,000 calls and 302,000 puts traded on the S&P. September 1550 puts are the most actives in the SPX pit. Meanwhile, VIX, which tracks the expected or implied volatility priced into S&P 500 options, was down .02 to 12.57. Just 169,000 calls and 78,000 puts traded on the volatility index. VIX May 19 and Aug 21 calls are the most actives on the volatility index.
Analyzing the ETF Market
iShares Japan Fund (EWJ) adds 15 cents to $11.91 and trades up to its best levels since before the financial crisis. EWJ is up almost 15 percent since early-April and some investors are possibly looking for a pullback in Japan’s equity markets, as about 16,000 calls and 43,000 puts have traded on EWJ so far. The largest trade is a block of 20,000 September 11 puts on the ETF for 24 cents per contract. An investor bought the puts, according to a source on the exchange floor, and appears to be opening a new position. 25,300 September 11-strike puts have now traded on EWJ against 4,499 in open interest.
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