Unusual Options Activity Review for Friday, March 1, 2013
Friday’s Bullish Trading
Microsoft (MSFT) saw higher call volumes Friday. The stock was up 12 cents to $27.93 and one of 18 components of the Dow Jones Industrial Average moving higher. Share volume was light, however, at 23.5 million. Typical volume in MSFT is about 40 million. Yet, call options on the stock saw more interest than usual. 75,000 contracts traded, which is almost 3X the number of MSFT puts that have changed hands. Much of the focus was in March upside calls that expire in two weeks. Mar 38s were the most actives. More than 20,000 contracts traded. Another 12,000 of the March 39 calls also traded in MSFT Friday. It’s not clear what was motivating the activity in the short-term calls on MSFT. The stock has been trending mostly sideways in recent weeks and is at the same levels Friday as one month ago. Earnings are not due out until Apr 18.
Bullish trading was also seen in Talisman Energy (TLM), Gold Fields (GFI), and Dollar General (DG).
Friday’s Bearish Trading
Delta Airlines (DAL) adds 57 cents to $14.85 in active trading of 14 million shares and? notched new 52-week highs after climbing nearly 50 percent since November. Options on the stock were busy as well. 28,000 puts and 11,000 calls so far. March 13 puts, which are 12.5 percent out-of-the-money and expiring in 14 days, were the most actives. More than 12,700 traded, including a 10,000-contract block for 4 cents per contract when the market was 3 to 4 cents. March 14 and January 12 puts are the next most actives in DAL Friday and implied volatility in the options on the airliner were up 2.5 percent to 35. Some investors are possibly opening positions in downside puts in DAL to help protect or hedge some of the big gains in the underlying stock.
Bearish trading was also seen in Cheniere Energy (LNG), American Express (AXP), and Dollar General (DG).
Index Recap
Overall volume totals were better than Thursday. 6.5 million calls and 7 million puts traded across the exchanges so far. The projected volume of almost 15 million contracts is below the average daily levels seen in February, however. According to the Options Clearing Corp, a total of 325,000 million options traded last month, which is down from 352,000 million in February 2013. Average daily volume was 17.1 million contracts, from 17.5 million a year ago. The month of March is off to a slower start as well. 15.7 million contracts traded on March 1, 2012. We probably won’t reach that level Friday. Meanwhile, the S&P 500 has seen a see-saw session and is up 3.29 points to 1,517.97. CBOE Volatility Index (.VIX) dropped .13 to 15.38.
Analyzing the ETF Market
iShares Japan Fund (EWJ) was up 10 cents to $10.31 and notching new 52-week highs after rallying 17.8 percent since mid-November. On the options front, 32,000 puts and 3,720 calls traded on the ETF. The top trade was a 15,000-contract block of Apr 10 puts for 15 cents per contract on the International Securities Exchange. The puts were bought, to open, according to data from the ISE. 25,000 EWJ April 10 puts were bought total for 15 cents per contract and the activity might be designed to hedge a portfolio of Japanese names over the next 7 weeks.
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