Thursday, March 10, 2011

Option Flow Recap March 10th

*Let us know if you like the new format.  Are the links to charts helpful?  Do you like commentary on each name? How can we make the blog better?  We have lots of ideas for the

Macro / Thematic

XLI Industrial SPDR - The April 35/31 put spread was purchased 15,000x while a total of  85,000 puts traded. The put/call ratio was at 8x today as investors feel the potential for further downside remains.  Up trend looks broken and selling the 31 puts makes sense as it is below the 200 DMA and 31 has been a big S/R line in the past. 


JCP J.C. Penney Company, Inc. – The April 35 / 37 1x2 put spread trades at $0.16, with the April 37s bought for $1.76 2500x and the April 35s sold at $0.96, 5000x.  I see the support at 35 and the rising 50 day at 34ish but the 200 day moving average is sub 30.  High risk trade unless you would like to own JCP lower. 

HRB H&R Block, Inc. – 12,775 March 16 calls traded on the day (65% on the offer) on the back of better than expected earnings.  This trade can be viewed two ways.  They are either looking for a continued move higher by next week or they are hedging short stock.  The stock has room to run above todays highs. 

GIS General Mills, Inc.  – an investor sold 10,000 April 38 calls at $0.56 and bought 13,000 January 45 calls for $0.66. Rolling calls up and out.  The stock appears to be basing. 

CL Colgate-Palmolive Company – The January 85 / 95 1x2 call ratio (back) spread is sold for $1, 7500x. The investor sold the 7500 January 85s at $2.70 and bought 15,000 January 95 calls at $0.85. It might roll up in strike prices or, if opening, a bet that shares will either 1) hold below $85 or 2) see a dramatic run higher though the Jan 2012 expiration which would be a new decade high.


AMD Advanced Micro Devices, Inc. – The October 7 / 8 1x2 put ratio spread traded 15,000x. The October 8 puts  were sold and the October 7 put bought paying $0.30 for the package.

ORCL Oracle Corporation – 3700 March 32 calls were bought for $0.54. Cheap bet on a bounce but lots of theta... could also be closing a buy-write.

S Sprint Nextel Corporation – 12,000 May 6 calls were bought for $0.08. The trade is an opening position.

FTR Frontier Communications Corp – An investor bought 14,500 May 7 puts for $0.10 to open.  Stock moving from the upper left to the lower right. If the "sell in May and go away" trade happens in 2011 these puts could make this trader's year.


C Citigroup Inc. – The  January 5 / 6 1x2 call ratio spread traded 15,000x for a debit of $0.105.  The 1x2 is a very popular trade in C as we have noted it many times on the Sea of Opportunity; here we featured it as our trade of the day.  The 1x2 in C gives nice upside with limited premium outlay. 

SFI iStar Financial Inc.  – The July 13 calls were very active today with over 7250 trading and 7000 March 9 puts traded as well.  

Industrials / Materials

CX Cemex SAB de CV – 5000 of the January’13 5 puts traded on the offer for $0.61. The January’13 7.5 puts were also active with almost 4500 trading on the day.  Puts active again, higher volume in the stock again, and the stock continues to move from the upper left to the lower right.  Interesting that it gaped down but closed higher....still down .08 or .92% on the day though.  Capitulation? I wouldn't bet on it... 

IPI Intrepid Potash, Inc.  – 2300 January 40 calls were bought for $1.25 to open.  Professional trader buying on weakness.  Seems early but deserves to be put on a watch list as this trader is looking for new all time highs.  Could also be hedging a short position so be careful. 


KWK Quicksilver Resources Inc - The April 12 / 14 bear risk-reversal traded 5000 at $0.62.  Aggressive trader looking for the gap fill.

HK Petrohawk Energy Corporation – An investor sold 3000 of the March 19 calls and bought the January 25 / 35 calls spread 6000x.  Appears to be a roll. 


AMRN Amarin Corporation plc – An investor bought the June 10 /15 call spread was 2500x for $1.40.  Gap fill trade?  Max gain is if the stock doubles from here.  Worth keeping on a watch list. 

HGSI Human Genome Sciences – Options were very active today on the news the FDA has approved the company's Benlysta lupus drug. Over 154,500 options traded, evenly divided between calls and puts. The March 27, 24 puts and the April 28 calls being the most active.  Stock looks to be breaking out. 

*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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