2015-01-15 Unusual Options Activity (LTM) (MS)

Posted on January 15th, by Mitchell Warren in Free Articles, Options Risk Management, Smart Money Report, Unusual Options Activity. Comments Off on 2015-01-15 Unusual Options Activity (LTM) (MS)

 Unusual Options Activity

  1. C- Roughly 20,000 Mar 2015 $52.50 calls were bought for $0.55-$0.70 each, against open interest of 9,485 contracts. The call to put ratio was 2:1 and call activity was 3x the average daily volume. This morning, Citigroup missed Q4 EPS and revenue estimates, sending shares lower. The stock is now coming in for a retest of the $46 support level that has held for nearly two years. Tangible book value of the company is now $56.83 per share.
  2. CSCO- A likely rollout from 15,000 Mar 2015 $30 calls ($0.32 credit) into 15,000 Mar 2015 $28 calls ($0.96 debit) today. Volume was above the open interest in the Mar 2015 $28 calls. He/she is likely doing a roll down to get a higher delta on the trade and is willing to pay up for it. Q2 earnings are due out on February 11th (shares have gone up after earnings on 2 out of the last 3 reports, but have fallen on 4 out of the last 7 reports). Cisco Systems has consistently beat EPS expectations by $0.01-$0.03 per share each quarter and grew the top and bottom line in the mid single digits. On January 14th, Barclays raised their price target to $29 from $26.
  3. GG- More than 5,000  Jan 2016 $23 calls traded with the majority being purchased for $3.05-$3.25 each, against open interest of 3,969 contracts. The call to put ratio is over 2:1 and call activity is 3x the average daily volume (implied volatility rose 7.6% to 54.11). Shares of Goldcorp broke out above resistance at the 10-week EMA recently and have near-term upside to the upper Bollinger Band (currently $25.53). Gold/gold miners are soaring on the news of the Swiss National Bank abandoning the floor in the EUR/CHF currency pair.
  4. LTM- The May 2015 $55/$60 bull call spread was put on 2,500 times for a $2.00 debit today. Volume was above the open interest in both options. If Life Time Fitness shares close at $60 or above on May options expiration then he/she will make 150%. Last fall there was talk of Life Time Fitness considering becoming a REIT (90%+ profits paid out in dividends). This trade could be a play on that catalyst coming to fruition in the first half of the year or possibly on solid quarterly results on February 12th due to those looking to follow through with their New Year’s resolutions.
  5. RRD-A rollout from 4,000 Jan 2015 $16 puts ($0.20 credit) into 4,000 Feb 2015 $16 puts ($0.80 debit). Volume was above the open interest in the Feb 2015 $16 puts. On average, only 745 options trade per day. R.R. Donnelley & Sons is going to a year over year decline in earnings in 2014 and likely to only grow EPS by 5% and sales by less than 1% in 2015. The company pays out nearly 60% of profits in the form of dividends (6.60% yield).

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