Unusual Options Activity Review for Thursday, February 28, 2013
Thursday’s Bullish Trading
Barnes and Noble (BKS) saw active trading for a second time this week. Options on the bookseller were busy Monday on unconfirmed reports the company was seeking to sell its retail business. The stock was up 51 cents to $15.74 in heavy trading of 5.3 million shares after the company reported earnings and confirmed a strategic committee is in place to evaluate the sale of the retail business. Options volume on BKS was 7X the daily average. 26,000 calls and 7,450 puts traded on the stock. July 20 calls were the most actively traded. 5,045 changed hands against 90 in open interest. July 14 and 16 calls were the next most actives in BKS and 30-day implied volatility in options on the stock eased 20 percent to 54.
Bullish trading was also seen in Supervalu (SVU), Dominion Resources (D), and Polycom (PLCM).
Thursday’s Bearish Trading
It was a rough day for JC Penney (JCP) shareholders. The stock dropped $3.59 to $17.57 on heavy volume of 48.5 million shares in the wake of the company’s latest earnings report. Options volume surged, as 244,000 puts and 80,000 calls traded on the retailer Thursday. The largest blocks printed late in the day, as an investor was apparently buying 12,000 May 16 puts on JCP for $1.56 and selling 24,000 May 12 puts for 88 cents, collecting 20 cents on the 1X2 put ratio spread. The spread traded 30,000X on the day (60,000 of the May 12 puts) and seems to be targeting another leg lower in JCP through the May expiration. A similar Apr 17 ? 20 (2X1) put ratio spread was opened in JCP a week ago ahead of the earnings news.
Bearish trading was also seen in Hasbro (HAS), Vishay Intertechnology (VSH), Tibco Software (TIBX).
Index Recap
Overall volume totals were extremely light Thursday. Total volume across the entire market was about 13 million contracts, according to Trade Alert Data, and well below the recent daily average of 15.7 million. In the index pits, 595,000 calls and 696,000 puts traded on the S&P 500 Index (.SPX), CBOE Volatility Index (.VIX) and other cash indexes. The S&P held gains through most of the day, but slipped late to finish down 1.31 to 1,514.68. Meanwhile, VIX saw a late-day spike and finished up .78 to 15.51. For the month, the volatility index added 1.03 points.
Analyzing the ETF Market
The three most active options across the market Thursday were weekly options on the SPDR 500 Trust (SPY) which expire on 3/1: i.e. after tomorrow. Shares dropped 30 cents to $151.61 and the Weekly 152 puts were the most active. 101,483 contracts traded. Weekly 152 and 153 calls were the nest most actives, with more than 80,000 in both contracts. The interest in these very short-dated contracts comes ahead of the March 1 sequester deadline tomorrow and might reflect expectations for heightened volatility Friday as news headlines develop related to the event.
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