Friday Options Recap

Includes: C, IRE, IWM, KR, SBUX, SVMLF
by: Frederic Ruffy


Market action is mixed, after big gains the day before and better-than-expected jobs data released Friday morning. Economic numbers were in focus early after the Labor Department reported that the US economy adde 151,000 jobs in October, which was much higher than the 60,000 that was predicted by economists. As expected, the rate of unemployed stayed steady at 9.6 percent. Average hourly earnings rose .2 percent, and twice as much as expected. However, big gains yesterday, the major average chopped around somewhat aimlessly despite the stronger-than-expected jobs numbers. The trend continued into midday and, with forty-five minutes left to trade, the Dow Jones Industrial Average is down 35 points. The NASDAQ has lost 6. Meanwhile, the CBOE Volatility Index (.VIX) lost .21 to 18.31 and trading in the options remains very active, with about 11.3 million calls and 7 million puts traded across the nine options exchanges thus far.

Bullish Flow

Starbuck’s (NASDAQ:SBUX) adds $1.25 to $31 and 22,400 Nov 30 calls are sold at $1.21 per contract. This likely exits a position from last Friday when 20,755 traded at 47 cents (apparently a roll out of Nov 28 calls). Shares are up on earnings news today and have added 8.5 percent on the week. The investor is apparently looking for additional upside as well. A block of 23,000 Dec 32 calls were also bought-to-open at 71 cents today.

Bearish Flow

Big Prints in the iShares Small Cap Fund (NYSEARCA:IWM) Friday morning. Shares have added 59 cents to $73.95 and one investor sells the Nov 64 – 70 put spread at 28 cents, 47500X, to buy the Dec 68 – 73 put spread at $1.30, 45000X. This looks like a roll of a bearish position or a hedge, out of November and into December. November options expiration is in two weeks and this investor might be looking to buy a little more time for the trade to play out. They’re also rolling up the position up in strike prices.

Implied Volatility Mover

Very brisk trading in Citi (NYSE:C) Friday morning. Shares add 15 cents to $4.48 amid a rally in the banking names and 831,000 options trade on Citi in a little over one hour, which is about 8X the norm. The action includes 612,000 calls and 220,000 puts. The top trade is a Dec 4 – Jan 4.5 call spread, sold at 23 cents, 60000X. It might be a roll out of the in-the-money Dec 4 calls and into a new bullish position in the out-of-the-money 4.5 calls. Another noteworthy trade is a Dec 4 straddle bought at 60 cents, 15000X, which is possibly a closing trade. Meanwhile, implied volatility in Citi is moving higher, up 2.5 percent to 36.5 today and about 22 percent since Wednesday. High options volume and increasing implied volatility seems to reflect expectations that Citi shares could begin to see wider price swings in the weeks ahead.

Unusual Volume Movers

Bearish activity detected in Governor and Company of the Bank of Ireland (NYSE:IRE), 2624 puts trading, or 25x the recent average daily put volume in the name.

Bullish flow detected in Kroger (NYSE:KR), with 4600 calls trading, or 3x the recent average daily call volume in the name.

Bullish flow detected in Silvercorp Metals (SVM), with 5122 calls trading, or 2x the recent average daily call volume in the name.

Increasing volume is also being seen in Hecla Mining (NYSE:HL), Goldman Sachs (NYSE:GS), and JP Morgan (NYSE:JPM).