The top ten most active option contracts traded today were:
- S&P 500 SPDR (SPY) November 111 Put Options
- S&P 500 SPDR November 111 Call Options
- PowerShares QQQ (QQQQ) November 44 Put Options
- S&P 500 SPDR November 110 Put Options
- S&P 500 SPDR November 110 Call Options
- Bank of America (BAC) November 16 Call Options
- Bristol Myers (BMY) December 30 Call Options
- Select Sector Financials SPDR (XLF) December 14 Put Options
- Bristol Myers December 30 Put Options
- PowerShares QQQ November 44 Call Options
It
seems like the bearish betting outweighed the bullish betting today. It
seems that someone is very bullish on Bank of America going into the
options expiration this Friday. The November 16 calls are trading at a
very slight premium to the actual stock, so someone is paying the
premium to own the stock for these last 2 trading days. Looking at the
open interest there seems to be the most interest around the 16 strike
and then the 17.50 strike. If this market moves higher we could see
Bank of America pin to the 17.50 strike as the derivative contracts are
unwound, but that's a long shot in two days. I believe there may be
some speculation as to who the new CEO for BAC could be which is why it
traded quite a bit higher today on above average volume. It is very
rare to see a Bristol Myers straddle being among the most active
options traded, however we believe this is a bullish trade. If someone
were very bearish I don't think they would be spending a ton of money
purchasing in the money put options on
BMY, so I believe someone is
very bullish and this is a "synthetic stock" position. One would sell
the 30 strike put options and buy the 30 calls. This would give them
the stock for about a quarter less than current share price, and give
them unlimited gains if the stock goes higher. We noticed this was on
the breakout list of stocks to watch for Tuesday, therefore I believe
someone is taking a very bullish bet on this stock.
I did not do
too much trading today because I have been very busy with my retail
website, but I did manage to sell at-the-money put options on Suntech
Power for $65 per option contract. I did purchase the 14 strike puts to
limit my losses, so I ended up taking $50 per contract for the spread.
I believe Suntech (
STP) is a safe play even if they report an ugly
quarter, this is because of the news that came out last week. I think
this is extremely good news, and on any weakness we could see buyers
stepping in.
