Tuesday, April 12, 2011

Option Flow Recap April 12

Macro / Thematic

SPY SPDR S&P 500 ETF  – The May 123 / 127 / 131 put fly was bought 35,000x for $0.54.

SLV iShares Silver Trust – The May 34 / 36 / 38 put fly was bought 25,000x for $0.31.

EWJ iShares MSCI Japan Index – 25,000 of the September 10 puts were bought for $0.745.


TGT Target Corporation – 10,000 of the October 48 puts were purchased in two blocks for $3.00 and $3.05. The options appeared to be tied to 93k shares of stock.

DAL Delta Air Lines, Inc. – 17,000 of the September 11 / 12 call spread bought for $0.31 and 17,000 of the June / September 11 call was bought for $0.41. This is a roll of a long call position closer to spot and out from June to September.

CL Colgate-Palmolive Company  – The August 70 & 75 puts were sold and the August 85 calls bought for $1.65 net debit.


HK Petrohawk Energy Corporation – 17,650 of the September 30 calls were bought for $0.66.

KWK Quicksilver Resources Inc  – 34,500 of the April 12 / 14 risk reversals were closed. Bought the April 14 calls, sold the April 12 puts and opened the same position in May by buying 34,500 of the May 12 puts for $0.20 and selling the May 14 calls at $0.20. The entire trade was done for even money.

MUR Murphy Oil Corporation – 3200 of the May 72.5 puts were sold at $2.60. The puts were sold to open.

AHD Atlas Pipeline Holdings, L.P – 2250 of the October 80 calls were bought for $1.85. The calls were bought to open.


AMAT Applied Materials, Inc.  – 6000 of the April 15 puts were bought for $0.21.

S Sprint Nextel Corporation – 5000 of the January 4.5 / 5 risk reversal was bought for $0.03. The calls were bought and puts sold. The same combo traded multiple times yesterday, open interest in both contracts increased by nearly 30,000.

Industrial / Materials

It’s no secret that Rare Earths have been hot and heavily traded since all the chatter started a few months ago.  For those still in the dark, according to the Encyclopedia Britannica (remember those things… before Wikipedia?), rare earths are “pure or mixed oxides… of metals… originally thought to be quite scarce; however, cerium, the most plentiful, is three times as abundant as the lead in the Earth’s crust”.  Well, it appears that the infatuation for these stocks might be slowing down as shares take a breather from their highs. 

MCP Molycorp - JP Morgan analyst Michael Gambardella raised his price target from $74 to $90 according to Barron’s blog (Link).  Today, it looks like a mixed back of options as 46% of the 3,000+ April 70 calls traded bidside while 43% of the 3,000+ April 72.5 calls traded on the offer and some look like opening transactions.  In MCP right now, the top positions are: April 50P (5.5K), April 55C (5.2K), April 60C (5.1K), April 55P (5.1K), April 50C (4.9K).  Molycorp will report earnings on May 10th after the close.

MON Monsanto Company – 1750 of the May 75 calls were bought for $0.81


As earnings season kicks into full swing, financials are heavily traded (as usual).  JPM Chase (JPM) will report before the open tomorrow and the April 46 puts are actively traded with 46% executed on the offer.  In Bank of America (BAC) today, the April 14 calls were most active with 62% executed on the ask side.  In Citigroup, everything is active (as usual).  Morgan Stanley (MS), who reports on April 20th before the open, saw 4 times the usual option volume traded and it looks like one of the larger trades was a 27 line call roll from April to May for .62 cents, 6,800 times.  We’ll see by open interest figures tomorrow if they are, in fact, closing the April 27 calls to open the May 27 calls.  Also, on the CBOE we saw someone buy 9,500 MS July 27 calls for 1.41 to sell 2,500 July 30 calls at .37 and selling 2500 July 24 puts at .59.   

TD Toronto-Dominion Bank – 3000 of the July 80 puts were bought for 1.70, delta neutral versus 86.45 on a 25 delta.

BAC Bank of America Corporation – Two 10,000 contract blocks of the April 14 calls were bought for $0.06

*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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