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Sea of Opportunity ( is a blog created by a group of options traders in San Francisco, CA. The mission is to analyze what the "big money" is betting on and evaluate the risk reward to see if the trade should be followed or not.
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  • Trade of the Day: Starbucks SBUX 1x2 put spread
    On a relatively nice day for the stock, a trader places a bearish bet on the coffee giant that could pay off huge, while only risking 2 cents.

    Courtesy: LivevolPro

    Pros risk a small amount, use IV to their advantage, and stand to benefit in a major way if the trade works. The trade below is clearly a pro trade that could generate almost $800k in max profits. Take a look at how this trade is made after the (coffee) break.

    This trade was spotted using the amazing software from the folks at

    The Trade:
    Buy 2k SBUX Oct $33 Put at $2.76 (30.9 IV)
    Sell 4k SBUX Oct $29 Put at $1.37 (33.3 IV)
    Net: 2c debit
    This will likely expire around the time SBUX reports earnings, based on prior earnings. Clearly, we don't know exactly when earnings will be just yet. Both strikes trade against minimal open interest.

    Courtesy: LivevolPro

    Notice the October skew does offer one of the more attractive opportunities to play this trade with a longer term time horizon.

    Courtesy: LivevolPro
    As the stock price has been consolidating, the IV30 has been dropping.

    Courtesy: LivevolPro
    A breach of $33  would seemingly run into serious support around the $32 level. The $29 level approximates an open gap from October of 2010.


    Finally, for a little something different I have added a look at the pivot points for SBUX as of today's close. Notice how on the monthly pivots $33 is the approximate pivot point and $29 is approximately support 3. These are key technical levels that pro traders have an eye on.

    Now with all that said, I'm not into the new Trenta coffee sizing. Perhaps I will take a shot at the downside too ;)

    No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.
    Tags: SBUX, options
    Mar 09 11:47 PM | Link | Comment!
  • Option Flow Recap March 9th
     This post originally appeared @

    Macro / Thematic

    XLF Financial Select Sector SPDR – 120,000 June 18 calls were bought to open for $0.31.  Looks like a cheap bet that the XLF bounce off its 50 DMA hands and runs over 9% by expiration to profit. 

    EEM iShares MSCI Emerging Markets Indx – 50,000 May 49 calls were bought for $1.02. The trade appears to be opening. The contract is 4.7 percent out-of-the-money and has 72 days until expiration. Also notable in today’s trading was a total of 40,000 April 50 / 52 call spreads bought for ~$0.21.


    CEDC Central European Distribution Corp – 3000 March 12.5 calls were bought for $1.05.  Bounce play.  Has a gap to fill @ $13.53.

    TSN Tyson Foods, Inc. – 1400 April 17 puts were sold at $0.10.  Stock looks to be breaking out or making a move to previous highs.  Trader collects the premium at a strong support strike even if TSN pulls back and fills the gap @ 17.6.  200 DMA is at 16.9 and curling up.   

    CRI Carter's, Inc.  – 2000 March 30 puts were sold at $0.95.  Looks like a pin play to 30.  Stock gaped down .75 today but was bought aggressively and closed the day up .48 or 1.65%.

    BC Brunswick Corporation – 1000 June 21 puts were sold at $1.00 to open.  Strong up trend.  Trader looking to collect premium with the synthetic buywrite and willing to buy the stock around its rising 50 DMA.


    TSM Taiwan Semiconductor Mfg. Co. Ltd. – April 12.5 calls were active today following noise that the company might be in a potential partnership with Apple. Over 3700 of the calls traded with 60 percent bought on the offer. Stock also recently found support on its 100 DMA after completing a 5 wave down move. Could be starting wave 3 or 5.

    CTL CenturyLink, Inc. – 1400 of the April 41 calls were sold at $0.65 to open.  Possible buy-write.  Stock finally pulled back after a nice run from the mid 30's to the mid 40's and recently found support on its 200 DMA. 


    TCB TCF Financial Corporation – 1500 of the March 15 puts were bought for $0.20. The trade appeared to be an opening position.  Stock acting poorly.  Cheap bet weakness continues over the next 7 trading days. 

    BCS Barclays PLC – 3000 January’13 17.5 puts were sold at $2.65 to open.  Trader doesn't lose money until $14.85 on expiration.  Huge support at $16. Barclays is still way off its former highs and looks to be basing. 

    Industrials / Materials

    LPX Louisiana-Pacific Corporation  – On the back of renewed takeover speculation in the name 1800 of the March 11 calls were bought for today for $0.05. A total of 2239 calls traded today with no puts trading.  The stock could have formed a big rounded bottom. 

    UTX United Technologies Corporation - Ahead of the United Technologies Analysts and Portfolio Managers Meeting tomorrow both the March 85 and April 85 calls were active. 6700 and 2200, respectively, traded on the two lines (with 64% and 58%, respectively, being bought on the offer).  The stock is also in a strong uptrend and continues to move from the lower left to the upper right of the chart.

    CX Cemex SAB de CV – 5000 of the April 8 puts were bought for $0.23.  The stock has been in a downtrend since the end of last year.  This trader is looking for a test of 52 week lows or lower. 


    LNG Cheniere Energy, Inc. – 10,000 of the April 10 calls were sold at $0.65 while another investor sold 5000 of the March 8 calls at $0.90. Interestingly the March 9 calls traded 6100x with 85 percent of the trades being executed on the offer.  Huge volume in here recently.  Looks like the 100 DMA held on the first test down but a nasty bar today. Capitulation? 

    KWK Quicksilver Resources Inc – Throughout the day an investor appeared to be building a position in the April 14 /15 bullish risk reversal with a total of 11,700 trading on the day. One block traded at $0.20 1400x. Trader looking for a breakout of a long base. 


    WCRX Warner Chilcott Plc – 5000 of the March 24 calls were sold at $0.20 to open.  Looks like a pin play. 

    SQNM Sequenom, Inc. – 2500 January’12 7.5 calls were bought for $1.00.  Stock coming into strong support.  Trader looking for a bounce... maybe even a gap fill!  52 week high is 8.65 and the trade breaks even at 8.50 so basically looking for new highs by expiration. 

    AVNR AVANIR Pharmaceuticals – 5000 January’12 5.0 calls were bought for $0.28.  Trader looking for this bounce off the trend line and 200 DMA to run and test the highs. 

    *Special thanks to Flotilla Partners, Option Radar, BMO Capital, MEB Options, LiveVolPro, CBOE, Option Monster, and all of the options desks and traders we work with to provide the option flow!

    No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.
    Mar 09 11:45 PM | Link | Comment!
  • Trade of the Day: SanDisk Corporation July $45/60 bear call spread
    Trade of the Day: SanDisk Corporation July $45/60 bear call spread

    The Trade
    A trader sold 2,000 July $45 calls at $6.40 and bought 2,000 July $60 calls $1.32 for a credit of $5.08 or $1,016,000.

    As you can see from the graph above, the spread profits from a decrease in the underlying stock at expiration. The bear call spread has limited risk and limited profit potential at expiration. The max risk is $1,984,000, which would occur at an underlying price of $60 or more at expiration. The max profit potential is the credit, which would occur at an underlying price of $45 or less at expiration. The break even underlying price at expiration is $50.08.
    The line shown is the upper break even price at expiration. The 52-week range for SNKD is a low of $31.82 and a high of $53.60. SNDK traded 39,388 contracts today compared to average volume of 27,749.
    SanDisk Corporation is engaged in designing, developing and manufacturing data storage solutions in a range of form factors using the flash memory, controller and firmware technologies. The solutions include removable cards, embedded products, universal serial bus drives, digital media players, wafers and components. Today, SanDisk announced the release of the world's largest CompactFlash Card. The 128GB SanDisk Extreme Pro CompactFlash will be available in the first quarter of this year, and costs $1,499.
    Mar 07 7:21 PM | Link | Comment!
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