Tuesday’s Bullish Trading
SodaStream (SODA) is bubbling to fresh 52-week highs today after the company’s first ever Analyst Day motivated multiple broker upgrades of the stock. SODA is up $6.68 to $63.97 on increasing volume of 3 million shares. Meanwhile, 31,000 calls and 13,000 puts have traded in SodaStream options today. May 65 calls, which are now 1.6 percent out-of-the-money and expiring in just a few days, are the most active. 5,900 contracts changed hands. July 65, May 60 and May 70 calls are the next most actives and 30-day implied volatility in the options on the stock is moving as well, up 36 percent to 52.5.
Bullish trading was also seen in Ford (F), Cemex (CX), and Masco (MAS).
Tuesday’s Bearish Trading
Johnson Controls (JCI), a Milwaukee, WI auto parts maker, is up 20 cents to $37.02 and options volume on the stock is running 2.5X the daily average. 5,420 puts and 810 calls traded on JCI so far. The flow includes several smaller lots of June 36 puts traded for 55 cents per contract when the market was 45 to 55 cents. 4,411 contracts have now changed hands against 1,252 in open interest. The increased activity comes after a three-week 16 percent move higher in the stock. Shares have been grinding higher and implied volatility in the options has fallen to only 19 percent. Some investors are possibly taking protective puts on JCI amid the low levels of volatility and after the recent rally pushed the stock to 52-week highs.
Bearish trading was also seen in Macy’s (M), Ocwen Financial (OCN), and World Acceptance (WLRD).
Index Recap
Trading in the options market is a lot more active today, compared to Monday. About 490,000 calls and 463,000 puts traded on the S&P 500 Index (.SPX), CBOE Volatility Index (.VIX), and other cash indexes, heading into the close of trading Monday. Today, however, 871,000 calls and 824,000 puts traded across all index products, according to Trade Alert data. The S&P 500 rallied 13.03 points to new record highs of 1,646.80. Roughly 571,000 calls and 616,000 puts traded on the S&P. May 1600 puts are the most actives in the SPX pit. Meanwhile, VIX, which tracks the expected or implied volatility priced into S&P 500 options, was up .30 to 12.85 and remains at low levels of less than 13. Volume is very light in the VIX pit, as 147,000 calls and 110,000 puts traded on the index. June 13 puts are the most active.
Analyzing the ETF Market
SPDR 500 Trust (SPY) is up $1.26 to $164.80 and on pace to set record highs on relatively light share volume of 72 million. By way of comparison, average daily volume in SPY is about 125 million shares. However, options on the ETF are very busy today. 1.4 million calls and 1.5 million puts so far, which is significantly more than the expected volume of 1.9 million contracts. May 163 puts on the SPDR 500 Trust saw a surge of activity through midday and are today’s most actively traded options contract. More than 290,000 May 163 puts have traded on the ETF against 84,510 in open interest. The activity seems somewhat unusual. May 163 puts on SPY are now $1.80, or 1.1 percent, out-of-the-money and expiring at the end of this week.
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