Unusual Options Activity Review for Tuesday, February 26, 2013
Tuesday’s Bullish Trading
Intel (INTC), the world’s largest chipmaker, was the Dow’s third best gainer Tuesday behind Home Depot and Hewlett Packard (HPQ). The stock edged up 35 cents to $20.38 in active trading of 64.8 million shares. Options on Intel saw active trading as well. 106,000 calls and 28,000 puts traded on the day, a ratio of nearly four-to-one. March 22 calls, which are 6.9 percent out-of-the-money and expire in 17 days, were the busiest. 44,000 contracts changed hands. March 21, Apr 22, Weekly 21, and Weekly 20 calls were the next most actives in Intel. It’s not clear what motivated the higher call volumes in the chipmaker Tuesday. The stock has not performed well lately, falling 9.3 percent since earnings were reported on January 17.
Bullish trading was also seen in Radian (RDN), Chesapeake (CHK), and Level 3 (LVLT).
Tuesday’s Bearish Trading
Smithfield Foods (SFD) is off 3 cents to $22.82 in active trading of 1.7 million shares after peer meat producer Tyson Foods (TSN) delivered cautious commentary at an Agribusiness conference Tuesday. TSN shares dropped 84 cents to $22.42. On the options front, volume in SFD was 4X the daily average. 4,700 puts and 2,975 calls traded on the ticker. April 22 puts were the most active. 2000 traded against 1,405 in open interest. Another 1,300 of the Apr 23 puts changed hands and 30-day ATM implied volatility in SFD options was up 9 percent to 40.5.
Bearish trading was also seen in Clearwire (CLWR), VALE, and Biomarin Pharmaceuticals (BMRN).
Index Recap
It was a busy day in the CBOE Volatility Index (.VIX) trading pit on the Chicago Board Options Exchange. After rallying 4.82 points, or nearly 35 percent, to 18.99 Monday, the market’s “fear gauge” is down 2.04 points to 16.95 (with fifteen minutes left to trade). More than 1.3 million options traded in the product. The flow includes about 865,000 calls and 445,000 puts. VIX April 20 and 25 calls are the most actives, with more than 140,000 traded in both. Those same contracts saw high volumes in late-January due to spread trading, in which some investors were buying the Apr 20s and selling the Apr 25s. Perhaps positions in the Apr 20 ? 25 call spread are being opened again on concerns about additional market volatility over the next few weeks. Or, maybe some investors are closing out positions in bullish VIX spreads after the big move in the index Monday.
Analyzing the ETF Market
SPDR Gold Trust (GLD) was up $1.91 to $156.25 after gold prices surged $27 to $1613.5 and scored the best gains so far in 2013. GLD, which is an exchange-traded fund representing ownership in the metal, is rallying on heavy volume of 16.6 million shares. Meanwhile, 148,000 calls and 113,000 puts have traded in the fund so far Tuesday. Mar 159 calls, which are now 1.8 percent out-of-the-money and expiring in 17 days, are the most actives in GLD. 14,800 traded against 14,169 in open interest. Lastly, implied volatility in GLD, as measured by GVZ Index, is off 1.85 to 15.63 and now well off last week’s high of 18.65.
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