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Despite the huge swing to negative sentiment in the past two weeks, Tuesday’s option activity not only leans towards bullishness but had a genuine speculative nature. The VIX has declined another 6% to 21.30 today bringing back below the level of two Monday’s ago before it spiked up to 28 level.

Some of the notable trading is speculative in nature; meaning the trades are not adjustments to existing positions or spreads to take advantage of the recent dip and create a little upside should the market bounce higher. Rather, they are fresh positions that are basically outright long calls that would need a somewhat dramatic pop from a news event such as earnings or mergers in prices to be meaningfully profitable. These include:

Standard Pacific (NYSE:SPF) is registering 29x its daily option volume as a block purchase of the March $5 calls and June $7.50 calls have brought volume of 18,000 calls to just 2,500 puts. This nearly equals the entire option open interest in the name. The homebuilder is set to report earnings after the close Wednesday and people seem to be betting it will have nice pop similar to DH Horton (NYSE:DHI) on Tuesday following its earnings report. Don’t know if I would bet on lightning striking twice, especially in a name that's concentrated in the hard-hit California region.

Under Armor (NYSE:UA) is seeing 5x its daily volume on chatter that it is a takeover target with Nike (NYSE:NKE) as the possible acquirer. The most active strike is the February $30 call which has traded 3,600 contracts or three times the strike’s prior open interest.

Biotech firm Cephalon (NASDAQ:CEPH) has had on and off speculation that it will be bought. One strategist seems like he wants to extend the time (and raise the price) that this might occur. The trade involved the February $65 and March $70 calls each of which traded 15,000 contracts in what is likely a roll up and out.

Gigamedia (NASDAQ:GIGM), a Chinese software company in which 28,000 of the July $2.50 calls traded. Some of this buying spilled over into the $5 strike in the March & April expirations

Disclosure: None

Source: 4 Companies Experiencing Speculative Option Activity