Trade of the Day: Gold (GLD) January $150/June $225 Bull Risk Reversal

The Trade

Trader sold January $150 puts at $2.35 and bought June $225 calls at $6.95 15,000x for a $4.60 debit, $6,900,000 total. Maximum risk is $231,900,000. Profit potential is unlimited.

Chart above graphs profit and loss profile for the trade. Trade is highly bullish and benefits from rise in volatility. Blue line below highlights break even at $187.49.

Alternative trade would the January $145/$150 bull put spread, buying $145 and selling $150, with the June $225/$240/$255 call butterfly. $1.05 debit for butterfly and $.60 credit for put spread, $.45 total debit. Position limits downside risk, while retaining bullish bias with a superior risk-to-reward ratio.

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Special thanks to Option Radar, BMO Capital, MEB Options, Bloomberg, Reuters, Optionistics, LiveVolPro, CBOE, AMEX, Option Monster, T.O.P. group, 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.

Trade of the Day: GLD buyer of June $145/$140 put spreads

The Trade:
A trader bought 20,000 June $145/$140 put spreads at $1.

Option Flow Recap Feb 25

Macro / Thematic

XLF - An investor sells 50,000 March 15 puts at a nickel and buys 25,000 June 15 puts at 36 cents. This 1x2 time spread, for a net debit of $0.26, might be rolling out of a hedge from March to a position half the size in June.

GLD - April 138/143 call 1x2 front spread for $.043 debit

Consumer

SLE – An investor sold 62,000 July 18 Calls at $0.49.

PHM – 3500 January 7.5 calls were bought for $1.13. Appears to be a bullish play and a bet that the stock will find a floor, then rally in the months ahead.

F – The June 17 / 20 1x2 calls spread was bought 5,500 by 11,000 times for $0.26.

MED – The April 23 / 26 call spread was bought 1000 times for $1.20. The company is due to release its results early-March.

ARO – 3000 April 25 puts were sold at $1.00

EXPE – 1400 April 20 calls were bought for $1.10.

Energy

HK – An investor sold 37,600 June 19 calls at  $3.71 to close and bought 47,000 June 21 calls for $2.53 to open. It appears to be a rolling up in strikes.

EP – An 1100 contract block of April 18 calls were bought for $1.01 to open.

RRC – Bullish activity today in Range Resources, including, 7200 June 70 calls being bought for $0.45 to open. Over 11k contracts traded in the June 70 strike.  IV was up 2.4%.  1k June/March 52.5 calenders were also bought. 

Industrials / Materials

TIN – 4000 March 25 calls were sold at $0.60

RTN – Bearish activity: 2100 of the March 50 puts were bought to open for $0.67

Tech

ATVI – The May 12 Calls were bought 20,000 times for $0.28 vs 11.10 stock

GLW – 9500 April 24 / May 25 call spread was bought for $0.05 to open. It appears to be a roll of a bullish position from May to April, down one strike.

YHOO – Bullish long term play in Yahoo where 3900 January’13 15 calls were bought for $4.30 to open

Financials

CIM – 23,500 June 4.5 calls were sold at $0.05.

Healthcare

JNJ – 4500 January’13 75 calls were sold at $0.72

AVNR – 4100 June 3.5 calls were sold at $0.45.

*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.

Option Flow Recap Feb 24

Macro / Thematic

XLE  - Downside plays today March 74-71 1x2 put spreads bought for 0.50, 7000x by 14000x. The trade makes money with XLE closing on March expiry between 73.50 and 68.50, max profit of 2.50 with XLE closing on March expiry at 71.00 (7.75% lower from here), if assigned on short puts getting long XLE for 68.50 (~10.5% lower from here)

SPY - 8200 weekly call verticals bot @ $0.63 

GLD - Downside play with a 1x2 put spread 26440x13220 in the Sept 132/120 puts for a 1.97 debit (possible hedge)

Consumer

HBI – Bullish trading today with the March 25 calls seeing the most action. The largest single trade being 1730 March 25 calls bought for $1.15 to open.

TOL – Bullish flow in the homebuilder today with over 16,000 calls and 1400 puts trading on the day. Almost all the trading took place in the March 21 calls which was over 12,500 on the day

PHM – 18,850 April 7 puts were sold at $0.45. The investor saw the three day slide in homebuilders as an opportunity to sell the at the money puts.

Energy

PBR – 3000 April 45 calls were bought for ~$0.50.

KWK – 7000 of the March 15 / 16 call spreads were bought for $0.45

HK – 20,000 January 30 / 35 call spreads were bought for $0.53 to open.

Industrials / Materials        

WM – Bearish option flow today with over 11,000 puts and only 2100 calls trading on the day.

FDX – 1500 April 90 / 95 call spreads were bought for $2.41.

Tech

BRCD – 19,000 of the April 6 straddles were sold at $0.77.

LLTC – 4900 March 34 calls were bought for $0.85

Financials

RDN – 1000 March 8 / April 7 put spreads were sold at $0.35. The March puts were sold and the April puts bought.

*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.