Monday’s Bullish Trading
Delta Airlines (DAL) sees two days of higher call volume. 18,440 May 17 calls traded on the airliner Friday and the activity created 15,902 in new open interest. The stock was up 14 cents to $16.95 today and total volume in Delta was about 27,000 calls and 1,700 puts. Much of the focus was on May 18 calls, where 18,115 contracts traded against 5,160 in open interest. It’s not clear what is motivating the higher volumes in May call options on Delta, as there have been no immediate headlines on the ticker lately. The company reported earnings last Tuesday and is scheduled to present at Bank of America conference on May 15. The airline sector has also been in focus in recent days after the House late last week passed a bill that will end sequester furloughs at the FAA.
Bullish trading was also seen in Mosaic (MOS), Clearwire (CLWR), and Valero (VLO).
Monday’s Bearish Trading
Options on Barrick Gold (ABX) were busy Monday morning. Shares of the gold miner were up 71 cents to $19.26 and a large spread traded on the stock when an investor sold 20,000 January 10 puts on ABX at 20 cents and bought 20,000 October 15 puts for 74 cents. Looking at trade history of the two contracts, the spread, for 54 cents, appears to be rolling a position from the Jan 10 puts up to the Oct 15s. Shares have rallied 10 percent after falling to multi-year lows of $17.51 less than two weeks ago and an investor with a protective put position might have initiated the spread to adjust a hedge.
Bearish trading was also seen in US Steel (X), Gilead Sciences (GILD), and Knight Trading (KCG).
Index Recap
PHLX Bank Sector Index (.BKX) adds .20 to 56.78 and is back within striking distance (1.4 percent) of multi-year highs of 57.6 set in mid-March. On the options front, a noteworthy trade in BKX was an 8000-lot of June 58 calls sold at 85 cents per contract, according to data from the options exchange. The position will create the largest block of open interest in the options on the bank index, which holds a basket of two dozen leading banking names. An investor with a large portfolio of financial-related stocks might have sold the calls as part of an over-write or covered call-type strategy.
Analyzing the ETF Market
SPDR Technology Fund (XLK) finished up 43 cents to $30.47 amid relative strength in the tech sector and options on the ETF were busy Monday. About 33,000 calls and 1,950 puts traded on XLK today. May 31 calls, which are now 1.7 percent out-of-the-money and expiring in 18 days, were the most active. 17,330 contracts traded against 11,073 in open interest. We saw similar activity in the May 30 calls on XLK last Monday. Open interest at that strike, which is 47 cents in-the-money, is now 52,147 and the largest block of OI in the tech fund.
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