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 Option Block 101: Size Money vs. Smart Money Trading Block: The market is off to the races...again. Strong rallies across the board. VIX cash finally makes its way down into the sub-30 range, welcome news for those who have been leaning to the downside in VIX. European leaders expand bailout fund - 50% write-down on Greek debt. Is the European debacle behind us? Strong economic data -- the economy grew at 2.5%, consumers strongest since Q4 2010. Also, a strong earnings season so far -- more than half of the companies in the S&P 500 have released quarterly results since Oct. 11, and about three- quarters have beaten the average analyst estimate, data compiled by Bloomberg show. Odd Block: Unusual activity in: Avon Products, Inc. (AVP) It’s been a rough day for door-to-door cosmetic seller Avon Products, Inc. (AVP) with the company posting Q3 earnings this morning that missed estimates by 17% and announcing the SEC is investigating its contracts with financial analysts. The shares are currently trading 17% lower and are flirting with their 52 week low. Option volume is already 10 times the company’s average daily activity with the most notable trading carrying a long term Bullish sentiment. The January ’13 20 strike Calls have seen more than 6,000 contracts cross the tape and, with 85% of the trades taking place on the offers and little current open interest, it appears to be opening buyers looking for the stock to climb above the $22.20 price level during 2012. MGIC Investment Corp. (MTG) A long term Bullish option player appears in private mortgage insurer MGIC Investment Corp. (MTG) this morning with the purchase of 82,500 January ’13 10 Calls at $.45. This trade not only creates the largest contract position in all of MTG’s listed option but also ranks as the highest volume option trade so far today. With a long delta of 32, this trade carry’s a long share equivalence of more than 2.6 million shares and will need the stock to rally more than 300% over the next 14 months to reward this investor with any profits. Total option volume in MTG is currently more than 17 times its average daily contract activity. HL – Hecla Mining Co. Shares in the mining company are up 7.5% to stand at $6.30 as of 1:40 pm EDT, on an up-up-and-away kind of day for U.S. equities. Hecla Mining Co. popped up on our ‘hot by options volume’ market scanner following a burst of activity in December contract calls. Options traders exchanged about 25,000 calls at the Dec. $6.0 strike this morning against open interest of 3,315 positions. It looks like most of these in-the-money calls were purchased for an average premium of $0.63 apiece. Shares in Hecla Mining last traded above $6.63 back on September 22. Xpress Block: Tim Navabi runs down the recent activity at OX. Buy, buy, buy! Traders are getting long as sellers are exhausted and saying goodbye to the puts holders. Using a LEAP as a covered call swap out - the LEAP vs. the short term call. What happens to that LEAP if your front month option expires or is about to expire and the option is in the money? Around the Block: An update that the Baidu (BIDU) earnings just came out and in the afterhours is trading, hovering around $1.50. Netflix trading in the 80 handle, creating widows left and right. Amazon down as well, closed today at about $2.07, was trading as high as $2.40 before earnings. MF Global hitting the 4 handle, a lot of activity in the Nov 01 puts - not a good sign. |
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Option Block: The 100th Episode Extravaganza Trading Block: A brand new Options Insider website! Are there any legs to the rally? Where was VIX during this rally? Netflix, the window maker, released earnings after the bell. Odd Block: Unusual activity in: Xpress Block: John Grigus from OX discusses his interesting first two calls of the day - customers ask "Why was I assigned on OTM options? Why was I not assigned on ITM options?" A review of the first few weeks of trading in SPXpm. Around the Block: An update on Netflix, will it bounce? Amazon earnings out 10/25, after the bell - is it wise to have underlying going into the earnings? |
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Option Block 99: Selling MSFT Premium Trading Block: A rare fairly uneventful day. Chipotle Mexican Grill with earnings after the bell - Is CMG the other Apple? Microsoft after the close - a whopping non-event. Odd Block: Unusual activity in: Microsoft (MSFT) Basically printing money today. Options on the software giant are the most actively traded by volume on any single stock ahead of the company’s much-anticipated first-quarter earnings report. The near month October at-the-money contracts, which expire after the close tomorrow, are seeing the most activity with the 27 strike Puts leading in volume. BP PLC – (BP) Earlier in the session, Total SA, Europe’s third-largest oil company, popped up on our ‘hot by options volume’ market scanner after a block of 8,500 calls changed hands at the May 2012 55 strike against open interest of 385 contracts. Roughly 30 minutes before the call activity in Total appeared on our scanners, it looks like the same investor purchased 8,500 call options on BP at the April 44 strike for a premium of $2.45 apiece. Xpress Block: News on the OX app for iPhone and soon to be released app for iPad. When might listeners of the Options Insider be able to stream and download this show through the OX app? Around the Block: Amazon next Tuesday - A counter-pole to Apple right now, given their rival content ecosystem. General Nutrition Corporation with earnings tomorrow, GNC has been making some interesting volume spikes recently. Ford earnings next Wednesday - how to prep for this. |
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The Option Block 98: Playing Apple Earnings
Trading Block: Volatility rundown. Issues with the structure of the VIX - is it time to revamp the "Fear Index." Hot metals action. Odd Block: One massive bull in CHMT. Sizable bullish call activity in USU. Xpress Block - Debating the use of market orders by retail options traders. Around the Block: Playing AAPL earnings with options. Is a buywrite synthetic your best bet? |
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Option Block 97: Live From FIA Chicago Trading Block: VIX Rundown - VIX at a decisive point, at the 32 level, it could be on the move. Apple rallying post-Jobs -- how best to position going into earnings. Alcoa came off after the bell already selling off. A look at upcoming earnings season perhaps? SPXpm -- comments and criticisms. Odd Block: Integrated circuit maker Marvell Technology Group Ltd. (MRVL) with a multi-exchange sweep of 5,000 October 16 weekly calls. Short-term bulls gobbling up weekly calls. XLF – Financial Select Sector SPDR (ETF). The XLF has rallied 9.2% in the past week, but impending earnings from big banks spurred some strategists to snap up bearish put options on the ETF. Bears looking to hedge their bets in XLF ahead of earnings season with short-term puts.
Listener Questions: Impact of Weekly Options on Brokerage Firms. The ongoing narrative of weekly options says that they are a boon to the options business, and to options brokers, because they are prompting many customers to trade 4 times a month vs. once a month. I'm curious if the boys at OX can confirm this trend with what they've seen internally? I'd imagine this isn't the case for premium buyers, but I'd think that premium sellers have certainly increased their trading due to the weeklies. Is it 2X, 3X, 4X, perhaps some other factor like 1.8X, etc. Any insight you could provide into this would be appreciated.
Around the Block: Earnings, Earnings, Earnings! AAPL & BAC next week. Also, Jobless Claims - 10/13, Retail Sales & Michigan Sentiment - 10/14. |
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Option Block 96: Resetting the VIX Bar Trading Block: VIX finally gets to the mid-30s! The bar for has been raised. Apple without Jobs - down 0.5%. What effect could Jobs have on Apple stock post-mortem, or is this a turning point for Apple? Odd Block: Mortgage insurer MBIA Inc. (MBI): Shares are trading 3% higher this morning and early option activity suggests some investors believe the recent upturn in the company’s shares will continue over the next couple weeks. The bullish October 9 calls have seen nearly 5,000 contracts trade already this morning and, with 80% of the activity either mid-market or on the offers, it looks like buyers looking for the stock to rally another 16% over the next 11 trading days. Children’s Place Retail Stores, Inc. (PLCE): The specialty retailer of children’s clothing saw greater-than-normal activity in its options this morning. It looks like one call seller populating the November contract expects the stock to resist below a specified ceiling through expiration day in six weeks. A block of 2,000 calls changed hands at the Nov. $55 strike against paltry previously existing open interest of just 20 contracts. The call options appear to have been sold by one options player for a premium of $0.85 per contract. Xpress Block: Tim Navabi grabs the reins and discusses what was trading today at OX, as well as a rundown of some of the commodity movers. CBOE also recently unveiled SPXpm -- has it been successful? Around The Block: Nonfarms: October 7 Gold and Silver are both consolidating, something to definitely check out. Apple earnings: October 18. Google earnings: October 13 |
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Option Block 95: Kodak vs. American Airlines Trading Block:
Around the Block:
Attention Option Block fans.....do you want to see another live taping of your favorite options podcast? Yes, it's back, and this time, it's at the FIA Futures and Options Expo. Register now through VolX, The Volatility Exchange and receive your complimentary Exhibits Only pass for Options Insider listeners. In addition to enjoying the Expo, please join the The Options Insider for live radio shows. Here's the schedule: October 11 4 pm - The Option Block 5 pm - Volatility Views October 12 1:30 pm - The Long & Short of Futures Options All shows will be recorded on the FIA Main Stage in the exhibit hall. Live audience seating will be available on a first-come, first-served basis. Hope to see you there! |
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Option Block 94: AMZN Takes On AAPL Trading Block: The market rallied on stronger than expected GDP numbers, and a little ease on European concerns, combined for a strong up move early in the day. Thirty-year rate is 4.01% -- the lowest on record. Rumors of Amazon getting into the tablet wars -- stock down 3%. With Amazon in its territory, Apple moved to the downside -- is it time to be bullish? The spread between VIX and VXN continues to widen. Odd Block: Unusual activity in Dollar General (DG) - size call sales going up for the past couple of months. Dreamworks Animation Skg. (DWA) - been on a downside tear over most of the last year, as high as 38 early November last year, straight down since then, trading near 18 now. Looks like someone is trying to protect some downside and decided to put on the puts and end the free fall. Strategy Block: Mike Tosaw dispenses some vintage options wisdom, discussing the concept of dollar cost averaging. Around the Block: Ford hovering at the 10 strike. Apple earnings out October 18; CBOE earnings out October 5. A lot of energy stocks are at lower levels now. |
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Option Block 93: Metal-Ocalypse Strikes Again Trading Block: The relationship between VIX and VXN, how it could have helped you. Late session rally on European hopes. The Metal-ocalypse continues - where is the bottom? Sell-offs in both GLD and SLV. EK crushed to the downside...again -- CDs upfront premium not at 41%! Groupon's ponzi scheme continues -- restated their entire 2010 results and slashed revenue in half. Odd Block: Harry Winston Diamond Corp. (HWD) – Size put seller. Fresh prints in HWD puts drove options volume in the front month above the prevailing level of overall open interest on the stock in the first half of the trading session. Hasbro, Inc. (HAS) - A Mark Sebastian favorite. Call buying spread to the Jan. 2012 $40 strike, where 723 contracts were picked up at an average premium of $0.80 each. Open interest in calls at the Jan. 2012 $40 strike far exceeds volume of 1,015 contracts exchanged thus far in the session, suggesting trades today may or may not be opening. Options implied volatility on Hasbro rose 5.9% to 37.75% in early-afternoon trade. Novagold Resources (NG) - On average, they do about 7,000 contracts, today though 100,000! Size time spread - looks like 44K Dec 7 puts were sold in a closing transaction for around $1.08 - existing open interest of 70,000 contracts. Xpress Block: Tim Navabi runs through the top moving stocks and commodities over at OX today. Also a little overview on the use of settled and unsettled funds. Around The Block: Jobless claims on Thursday as well as GDP. Greek debt still on the horizon. The bulk of today's rally come after the lessening of those concerns, but the outlook on that changes frequently -- things could get either really good or really bad. |
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Option Block 92: Werewolves Love SLV Trading Block: A sea of red in the market today - recession fears slam everything except treasuries. VIX cash gaps up yet again -- VIX futures outlook. Metals/Commodities rundown - everything down across the board, with gold down as well, but no rolling down will be taking place before the weekend. Ford below the $10 handle. Odd Block: Yahoo! - (YHOO) Following an upgrade at Stifel, Nicolaus from “Hold” to “Buy” with a price target of $18.00, shares are on the plus side this morning. The analyst stated “the likelihood of a buyout has increased to 80%.” Looks like some folks are betting on a buyout over the next few weeks. Bank of America - (BAC) Some large option players are “raising the white flag” in Bank of America Corp. (BAC) today with two large blocks of call options being sold on the bids and most likely closing out previous bullish positions. Perhaps most painful, someone dumped over 100k Jan 20 calls for $0.01! Covanta Holding Corp - (CVA) Stock has been hammered over the past few days. Someone thinks it’s overdone and bought a size bullish risk reversal. Range Resources Corp - (RRC) Looks like those upside specs on the 70 and 75 strikes could have paid off. Xpress Block: Tim Navabi runs down the daily goings on at OX. Today was a day for risk management. There's always a tomorrow in the market. The tools available on the OX are here to the rescue. Strategy Block: Mike Tosaw discusses his profound belief that we will get through our current financial situation. But you need some type of plan in place for down days like today. Around The Block: A lot of concern going into the weekend. Another good time to have some units in you back pocket. VIX option implied volatility exploded today, selling premium does not make sense. Has the bleeding stopped at Netflix for now? If you're thinking of playing in inverse ETFs or options on the ETFs, the margin requirements are tighter on the inverse ETFs. Apple held onto 400 today - a flight to safety. |