Tuesday, March 15, 2011

Option Flow Recap & Chart Review March 15

Click on the company name for a chart.  If you have any questions or suggestions on how to make the blog better please let us know. 

Macro / Thematic

EWY iShares MSCI South Korea Index Fund(ETF) – 24,000 March 54 puts were bought to open. They are currently 6.4% out of the money and with 3 days left to expiration.  Traders looking for this to test its 200 DMA by Friday.  Obviously Korea's economy is heavily tied to Japan.

EWJ iShares MSCI Japan Index (ETF) – EWJ traded over 900k contracts, 39x its average volume as traders spent over $4 million to add 4.2 million deltas in the name.  Most of this came from over 100,000 April 8 / 11 bullish risk reversal trade for ~$0.04. The April 11 calls were purchased for $0.14 and the April 8 puts sold at $0.10.  Capitulation?


TGT Target Corporation - 7500 July 45 / 55 strangles were sold at $2.19.   In the chart I drew white horizontal lines at the strikes they sold and red lines at their break even.  Looks like a good sale if you're willing to take that kind of risk.  5000 July 50 Calls were also bought for $3.15 which could be related.  Interesting trade.

TIF Tiffany & Co. – 2500 January 50 puts were sold at $4.63 and 2500 January 55 / 70 call spread was bought for $5.70. It appears to be opening.  Selling puts below its 200 DMA to help finance a call vertical that gives this trader a fat profit if TIF runs to new highs by next year.  Pro trade.

HD The Home Depot, Inc – 10,0000 March 36 / May 37 call spread was bought for $0.67. Appears to be a roll ahead of Friday’s March expiration.  Roll up and out.

LEN Lennar Corporation – 4000 April 19 calls appeared to be bought to open for $1.15.  Big bounce of its 100 DMA today.


LDK LDK Solar Co., Ltd. – Over 25,000 calls traded today in the Chinese solar company. The March 13, March 14, April 12, September 15, and January 15 calls were all active. Second day in a row the stock trades heavy volume and out performs.

BP BP plc (ADR) – 7000 April 41 calls appeared to be bought for $3.20 to open.  Either bullish or stock replacement now that the stock hard broke it up trend.  Should be interesting to see this trade near its 200 DMA.

OXY Occidental Petroleum Corporation – 3300 January’12 70 calls were sold at $30.30. The trade was an option was tied to $98.42 stock.  Buy write.  Stock bounced off 100 DMA today.

Materials / Industrials

BHP BHP Billiton Limited (ADR) – Over 30,000 April 75 / 70 put spreads traded on the day.  They look to be bought to open.  Very odd trade to me.... 70 is a long way down...below its 200 DMA. Could just be a cheap hedge.  Maybe news is coming out... it did break down below its 100 DMA badly today with volume.


AAPL Apple Inc. - 1,000 340/385 and 1,000 345/380 strangles were sold. Both with a bullish delta bias. Looks like this trader smartly took advange of the early moring volatility rise.  Not sure I'd go with a bullish bias... the stock has clearly broke down of its upward channel and its 50 DMA.  Ominous sign for the market in general.

CSCO Cisco Systems, Inc. – 10,000 April 16 puts were sold at $0.13.  CSCO hasn't been able to catch a bid.  This trader is looking for the 2004 to 2006 lows to hold at least until April.  Also if you draw the neckline of the H&S pattern at 22.5 then the pattern has played out.  If you draw the neckline at 21 then this might get to down to $14 which was the financial crisis lows.


TEVA Teva Pharmaceutical Industries Ltd (ADR) – 3150 April 52.5 calls were sold at $0.23 and 3150 June 52.5 / 57.5 calls bought for $0.76.  Shorter term bearish....longer term bullish.

*Special thanks to Flotilla Partners, Option Radar, BMO Capital, MEB Options, LiveVolPro, CBOE, Option Monster, and all of the options desks and traders we work with to provide the option flow!

No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.

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