Unusual Options Activity Review for Friday, March 8, 2013
Friday’s Bullish Trading
BMC Software (BMC) is up 71 cents to $43.05 and options volume on the stock is very lopsided Friday. 7,300 calls and only 70 puts traded in BMC so far. January 45 calls are seeing the most activity. 4,015 contracts traded against only 62 contracts of open interest. Most of volume is due to one 3585-contract block traded for $2.80 per contract when the market was $2.65 to $2.90. January 47, August 44, and August 45 calls on the Houston, TX application software-maker are also seeing opening activity. It’s not clear what is driving the higher call volume. There are no obvious headlines and the stock has seen see-saw action in recent months. In fact, BMC is at the same levels today as it was in May of last year.
Bullish trading was also seen in Newell Rubbermaid (NWL), UAL, and Micron Technology (MU).
Friday’s Bearish Trading
Kinder Morgan (KMI), a Houston, TX oil and gas pipeline company, is up 11 cents to $37.37 and options volume on the stock is running 5X the daily average. 12,000 puts and 1,100 calls traded in the name. The top trade is a 5000-contract block of April 35 puts, which was bought for 27 cents per contract. More than 10,000 now traded against 4,299 in open interest. It’s not clear what is motivating the activity, as shares are steady and there are no headlines on the ticker. Some investors are possibly setting up protective put positions against shares gained 16 percent off mid-November lows. 35 puts on the stock are now 6.3 percent out-of-the-money.
Bearish trading was also seen in Clearwire (CLWR), Aetna (AET), and Lowe’s (LOW).
Index Recap
CBOE Volatility Index (.VIX) slipped again and is down .41 to 12.65 late-Friday. The market’s so-called “fear gauge”, which tracks the implied volatility priced into a strip of S&P 500 Index options, fell 17.6 percent on the week. Some players in the options market are possibly anticipating an uptick in volatility in the weeks ahead, however, as April call options on VIX have been very busy Friday. A total 409,000 calls and 251,000 puts traded total and, of that, two-thirds ? or 66 percent ? have been April options. April 18 calls are the most active 72,200 contracts traded. April 16 and 17 calls on the volatility index are busy as well.
Analyzing the ETF Market
Options on the iShares Silver Fund (SLV) are busy for a second day. 56,570 January 40 calls traded on the ETF yesterday and the activity created 43,000 contracts of new open interest. At 110,000 contracts, the Jan 40 call is the largest block of open interest in the silver fund. Shares are up 15 cents to $28.06 today and the interest in the contract continues. More than 34,000 Jan 40 calls traded in SLV. Total volume in ETF, which is fund that represents ownership in the actual metal, is 130,000 calls and 37,000 puts. Shares have not performed well in recent months and are down 18 percent since September. The recent interest in January calls might reflect expectations for an aggressive rebound in silver prices in the months ahead. $40 calls on the fund are 42.6 percent out-of-the-money.
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