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Sea of Opportunity (http://seaofopportunity.blogspot.com/) 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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  • Option Flow Recap
    Macro

    SPY -  10,000 March 132 / 126 put verticals bought for $1.02.  This strategist is looking for the SPY to fill its gap from Jan 3rd.    

    IWM - 10,000 March 79 synthetic shorts trade at the 79 strike and 10,000 long 82 strike straddles trade for $6.62
     
    Consumer

    SIRI - A large block of 17,000 January 2 calls were bought for $0.28. 28,000 traded on the day with almost 93% trading on the offer. A total of 70,000 calls and 9000 puts traded on all lines and across all months today.

    MGM - 4000 January'12 12.5 calls bought for $4.40 to open.

    DIN - 1570 March 55 calls bought for $4.90 to open.

    TGT - 1000 March 57.5 calls were sold at $0.34

    TSN - 3500 April 21 calls were bought for $0.20

    Energy

    VLO - A block of 7800 January 35 calls were bought for $1.74. The trade appears to be opening.

    SCG - 2500 of the March 40 puts were sold at $0.75 to open.

    Tech

    MU - Sizable bullish trade in Micron in which an investor bought 15,000 April 13/15 Call Spreads for $0.32.

    DELL - 12,500 of the January 12.5 / 17.5 strangle was sold at $1.45. This comes after the company reported a quarterly profit of $0.53 per share, far above analyst estimates of $0.37.

    MRVL - 35,000 of the February 18 puts were sold at $0.04.

    AMD - 10,000 February 8 calls were sold at $0.79

    Industrials / Materials

    CSGP - 1000 March 60 puts were bought for $2.00 to open.

    FAST - 1000 May 70 calls were sold at $0.75 to open.

    GE - 1000 April 23 calls were bought for $0.43.

    APH - 1600 March 60 calls were sold at $0.525 to open

    Financials

    WFC - Wells Fargo options were very active following the abrupt exit of the company's CFO Howard Atkins, which some view as a sign of internal conflicts within the bank about disclosure practices. The largest trade was a block of 3,000 March 32 puts for $0.80. 140,000 calls and 184,000 puts traded on the day

    USB - 4500 February 28 calls were bought for $0.73.

    Healthcare

    SVNT - 13,000 February 10 / March 9 put spreads trade today at $0.28. It appears to be a roll down one strike and out one month.

    MHS - Early in the morning an investor bought 1900 February 62.5 calls were bought for $0.75, followed shortly thereafter by another sweep buyer picking up 1100 calls for $1.00.

    *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!
    Tags: SPY, IWM, SIRI, MGM, DIN, TGT, TSN, VLO, SCG, MU, DELL, MRVL, AMD, CSGP, FAST, GE, APH, WFC, USB, SVNTQ, MHS, Options
    Feb 17 12:24 AM | Link | Comment!
  • AET upgraded by GS
    Aetna, Inc. (NYSE:AET) was upgraded to a buy from neutral Monday by Goldman Sachs to a price target of $44 from $37 (a 18.9% increase).  It was also added to its Americas Buy List.   The move also triggered a down grade to United Health Care (NYSE:UNH) since they see less upside in the name.
    Tags: AET, GS, UNH
    Feb 07 10:16 PM | Link | Comment!
  • PBR break out or back into the range? Option play to play both ways



    PBR has been basing within a range of $32 and $38.5 and could be setting up to break out.  Instead of buying calls or verticals here and buying a bunch of premium I wanted a spread that wouldn't hurt me if the market pulls back and PBR stays in its range. 

    The Trade: 
    The April 38/40/41 broken wing butterfly costs $0.50 with a max gain of $2.  Here is what the risk/reward looks like: 



    Not a bad spread but I really don't want to spend that much money.  Currently the April strike pegger suggests the pin could be at at $35 which is also the level of the higher low put in last Friday.  The 200 day moving average is currently at $35.78 and the 50 day is at $36.  Therefore I wouldn't mind getting long @ 35 and I would get full size long at $32ish (the bottom of the range) with a stop at $31.5.  

    In order to reduce the cost of my broken wing call butterfly I like selling the 35 put 2x and buying the 36 put 1x.  I also like buying the 25 put 1x to reduce the margin cost by about $2k per spread.  This is another broken wing fly for a credit of $0.47; here is what the risk reward looks like: 



    As you can see max profit is at $35.  Lets look at both the call and put broken wing flys together.  Here is the risk/reward: 



    Max Profit at $35 on the downside; $40 on the upside.  The spread costs $.03 plus commissions (plus or minus $0.04 depending on your executions).  Allows me to play the upside break out for very cheap and makes money if we go back into the range.  The spread also gets me long under $35 closer to the low end of the range.  I personally like this risk reward MUCH more than just buying calls and gambling on a breakout. The margin requirement for this trade would be about $1k per spread.

    PBR is a Brazilian integrated oil and gas company similar to XOM, CVX, RDS.A, TOT, MRO, etc.



    Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in PBR over the next 72 hours.
    Feb 04 6:45 PM | Link | Comment!
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