Unusual Options Activity Review for Thursday, November 15, 2012
Thursday’s Bullish Trading
Akamai Technologies (AKAM), the Cambridge, MA Internet company, was up 85 cents to $36.23 in active trading of 4.5 million shares Thursday. The company was presenting at a UBS Global Technology conference and perhaps offered some optimistic commentary at the event. For whatever reason, AKAM bucked the bearish trend Thursday and options on the stock saw brisk trading as well. November 37 calls, which are now 2.1 percent out-of-the-money and expiring after Friday were the most actives in AKAM. 4,410 traded against 4,130 in open interest. November 36 calls were busy as well. 4,268 changed hands vs. 1,863 in open interest. Total options volume in Akamai was about 22,000 calls and 4,850 puts.
Bullish trading was also seen in AK Steel (AKS), Abercrombie (ANF), and Sirius Satellite (SIRI).
Thursday’s Bearish Trading
DELL was down in after hours after the computer-maker was the latest big cap tech company to post earnings and revenues that failed to live up to Street estimates. DELL said it earned 39 cents per share in the most recent quarter on $13.72 billion in revenues. Analysts were expecting 40 cents on $13.89 billion. Shares were down to $9.35 in extended hours trading, from $9.56 at the close. Trading in Dell options was brisk ahead of the news. 89,000 calls and 46,000 puts traded in the name. The top trades were part of a strangle write strategy, as an investor sold 3000 May 10 puts on the stock at $1.32 and sold 9,000 May 13 calls at 15 cents. The 1X3 strangle appears to be a new position because volume exceeds open interest in both contracts. If so, it’s not really a bullish or bearish play, but a view that DELL will hold in a range (between 10 and 13) through mid-May 2013. There’s considerable risk to both the upside and downside from the short strangle strategy due to the fact that the investor is selling naked options.
Bearish trading was also seen in Lam Research (LRCX), Altera (ALTR), and Two Harbors Investment (TWO).
Index Recap
The S&P 500 Index (.SPX) lost 2.16 points to 1,353.33 and finished little changed Thursday. However, the index saw whippy action intraday and options in the SPX pit saw a flurry of activity due partly to the expiration. Thurday was the last day to trade SPX November options before a settlement value is computed Friday morning. 957,000 puts and 515,000 calls traded in SPX options. December 1,400 calls were the most actives. 80,868 traded. November 1,400 puts were the second most actives on the S&P 500. 71,933 changed hands. Some investors were probably rolling positions. That is, they were closing out November 1,400 calls on the last day to trade the contract while opening new positions in the Dec 1,400 calls. Similarly, Nov and Dec 1,400 puts were the third and fourth most actives in the SPX pit Thursday.
Analyzing the ETF Market
While some players were closing out positions in November SPX puts and calls Thursday, SPDR 500 Trust (SPY) saw brisk options activity as well. 1.5 million calls and 2.5 million puts traded on SPY. Shares slipped 23 cents to $135.70 and November 135 puts were the day’s most actively traded options contract. An impressive quarter million (253,996) contracts traded on the day. November 136 and 134 puts were the next most actives in the US listed options market Thursday. While some players were probably closing out positions before the contracts expire at the end of the week, other short-term play traders were perhaps taking positions in SPY November puts on the view that market volatility might remain elevated on expiration Friday.
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