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Yamana Gold call options sink

www.interactivebrokers.com

Yamana Gold call options sink

By Andrew Wilkinson at Interactive Brokers

A four-year low for the spot price of gold has had a devastating impact on Yamana Gold (Ticker: AUY), with shares in the name down at the lowest price in six years. Some option traders were especially keen to sell premium and appear to see few signs of a lasting rebound within the next five months. The price of gold suffered again Wednesday as the dollar strengthened and stock prices advanced. The post price of gold fell to $1145 adding further pain to share prices of gold miners. Shares in Yamana Gold tumbled to $3.62 and the lowest price since 2008 as call option sellers used the April expiration contract to write premium at the $5.00 strike. That strike is now 38% above the price of the stock. Premium writers took in around 16-cents per contract on almost 10,000 call options. Ahead of the session, less than half that number of call options were held among investors. The spate of call selling on the name contributed to around half the overall volume tally of 21,600 contracts, which is already above the 10-day average reading of 16,100 lots associated with the stock. Option implied volatility is up only marginally on Yamana Gold at 60.9% with the market value of the company halving in the past six-weeks.  The most widely-held option across all strikes is the April 2015 6.0 strike put option where open interest remains at 44,000 contracts.

Chart – Open interest highest at 6.0 strike puts expiring in April

 

 

 





LUV Options Active Ahead Of Earnings

www.interactivebrokers.com

There is lots of action in Southwest Airlines Co. November expiry call options today ahead of the air carrier’s third-quarter earnings report prior to the opening bell on Thursday. Among the large block trades initiated throughout the trading session, there appears to be at least one options market participant establishing a call spread in far out of the money options. It looks like the trader purchased a 4,000-lot Nov 37/39 call spread at a net premium of $0.40 apiece. The trade makes money if shares in Southwest rally 9.0% over the current price of $34.32 to exceed the effective breakeven point at $37.40, with maximum potential profits of $1.60 per contract available in the event that shares jump more than 13% to $39.00 by expiration. In September, the stock touched a more than 15-year high of $35.55.  Shares in LUV last traded near $39.00 in 1994.

Chart – Six-month chart of Southwest Airlines Co.


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Release Of Fed Minutes, Icahn Tweet Boost Shares In Apple

www.interactivebrokers.com

Shares in Apple (Ticker: AAPL) are near their highs of the session in the final hour of trading on Wednesday, adding to the muted gains seen earlier in the day, following the release of the September FOMC meeting minutes and after activist investor and Apple shareholder Carl Icahn tweeted, “Tmrw we’ll be sending an open letter to @tim_cook. Believe it will be interesting.” Icahn’s tweet hit the ether at 2:33 pm ET and was met with a spike in volume in Apple shares. The stock is currently up 2.0% on the day at $100.75 as of 3:15 pm ET.

Chart – Apple rally accelerates after Icahn tweet


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A Look At How BABA Options Are Trading

www.interactivebrokers.com

Alibaba (Ticker: BABA) options have been trading for one week. Let’s take a look at where options traders have accumulated the most positions in BABA call and put options. Per the below chart, the 90.0 strike calls and puts are by far the most held options contracts across all available expiries on the Chinese e-commerce giant. All told, it looks like there are approximately 52,000 contracts held at the 90.0 strike level, or roughly 17% of total open interest on the name of 312,000 contracts. The call/put interest ratio of approximately 1.5 on Alibaba indicates more of the open interest held of investors is in call options versus puts on the stock. Shares in BABA today are roughly flat on the session to stand at 88.20, and options traders have exchanged a little more than 22,000 contracts versus the stock’s average daily options volume of 99,000 contracts.

Chart – BABA Open Interest as of 10/06/14


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VIX Call Spreads Trade

www.interactivebrokers.com

The CBOE Vix Index topped 17.0 and the highest level since early-August on Monday morning amid declines in U.S. equities to start the trading week. The volatility index is off its earlier highs to trade 5.0% higher on the session at 15.65 as of 11:30 am ET. Options volume on the VIX is hovering near 360,000 contracts, or just more than 50% of the average daily reading of around 660,000 contracts. Calls are far more active than put options, as evidenced by the call/put ratio up above 4.2 in morning trading, perhaps as some traders position for volatility to stick around.

Large call spreads traded on the VIX today caught our attention as one big options market participant appears to be rolling a bull call spread from the October to November expiration. A 45,000-lot Oct 19.0/23.0 call spread appears to have been sold, while the November 17/23 call spread appears to have been purchased, all at a net premium of $0.57 per contract. The spread looks for volatility to potentially rise to the highest levels since December 2012 when the VIX touched a two-year high of 23.23. The chart below marks the 17.0 and 23.0 levels (dashed lines), the striking prices selected in the Nov 17.0/23.0 bull call spread.

Chart – 2-year chart of CBOE Vix Index


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SunEdison Options Volume Pops

www.interactivebrokers.com

At around 10 am ET on Wednesday, shares in SunEdison Inc. (Ticker: SUNE) reversed early-morning declines and jumped more than 11% to $21.39 on speculation General Electric Co. (Ticker: GE) may be interested in purchasing the company. Speculation has since been snuffed out after a spokeswoman for General Electric stated the company is not in talks to acquire the company. Shares in SUNE continue to trade up on the session, albeit off earlier highs, to stand 3.5% higher on the day at $19.98 and above its opening print of $19.46. The move in the stock sparked very heavy trading in options on the stock, sending volume to just below 100,000 contracts by 1:00 pm ET versus average daily options volume of around 24,000 contracts. Much of the trading traffic was in SUNE calls, driving the call/put ratio to roughly 10.0 during the first half of the session. Volume in shares of SUNE also spiked, with nearly 25mm shares traded versus average volume of 11.3mm shares.

Chart – Two-day chart of SunEdison


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IV Implodes On 4-hour YHOO Options As BABA Commences Trading

www.interactivebrokers.com

Investors are dumping shares in Yahoo, sending the stock down 5.0% to $40.08 after shares in Alibaba made their debut on the floor of the NYSE just before midday. Shares in BABA for their part initially traded up to a high of $99.70, a near 47% increase over the IPO price of $68.00. Typically, one would expect put options that are 5% out of the money with roughly 4-hours left to trade to see waning implied volatility. But, at the start of the trading session and ahead of the first trade for BABA, the Sep 19 ’14 40.0 strike put options were trading with 271% volatility or $0.30 per contract amid uncertainty as to how the start of trading for Alibaba would take shape.

After shares in BABA debuted, volatility in the 40.0 strike puts imploded, dropping almost immediately to 154% and sending premium on the contracts down to as low as $0.04 each. However, with shares in BABA at $90.70 as of 12:30 p.m. ET and having backed off of their intraday highs to trade below the initial traded price of $92.70, selling pressure on Yahoo is increasing and premium on those YHOO 40.0 strike puts has ripped to the upside. At last check, the 40.0 strike put options with just hours to go before expiration are changing hands at $0.60 apiece at roughly 150% implied volatility.

Overall volume in Yahoo options has surpassed 1 million contracts, more than twice the stock’s average daily options volume of 453,000 contracts.


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Big Prints In VIX Calls

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The CBOE Vix Index is in positive territory on Friday morning as shares in the S&P 500 Index move slightly lower. Currently the VIX is up roughly 2.75% on the session at 13.16 as of 11:35 am ET. Earlier in the session big prints in October expiry call options caught our attention as one large options market participants appears to have purchased roughly 106,000 of the Oct 22.0 strike calls for a premium of around $0.45 each. The VIX has not topped 22.0 since the end of 2012, but it would not take such a dramatic move in the spot index in order to lift premium on the contracts. The far out-of-the-money calls would likely increase in value in the event that S&P500 Index stocks slip in the near term. The VIX traded up to a 52-week high of 21.48 back in February. Next week’s release of the FOMC meeting minutes from August could give rise to increased volatility in U.S. equities. If you recall, the VIX spiked to approximately 17.5 on August 1st amid concerns over geopolitical risk that sent market participants scrambling for protection as stocks slumped.

Chart – One-year chart of CBOE Vix Index


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Call Butterfly Spread Looks For Upside In Autodesk

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Big prints in Autodesk, Inc. (Ticker: ADSK) call options today appear to be part of a call butterfly spread, a strategy that may be profitable if shares in the maker of 3D-software rise to fresh 52-week highs by October expiration. Shares in Autodesk are up 0.85% today at $53.82 as of 12:10 pm ET. The one-by-two-by-one call spread traded during the first 25 minutes of the session and is by far the largest trade in ADSK options today. Overall volume on the stock has soared to 35,000 contracts as of the time of this writing versus average daily volume of around 2,800 contracts.

It looks like one strategist purchased 5,000 calls at both the Oct 55.0 and 65.0 strikes, and sold 10,000 calls at the Oct 60.0 strike. The trade cost a net $0.75 per contract and starts making money if shares in Autodesk rally 3.6% over the current price to exceed the breakeven point at $55.75. Maximum potential profits of $4.25 per contract are available on the call butterfly spread in the event that ADSK shares surge 11.5% to $60.00 at October expiration. Autodesk’s shares traded up to a 52-week high of $58.68 back in February.


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SinoCoking Calls Active As Shares Surge

www.interactivebrokers.com

Coal and coke producer SinoCoking Coal and Coke Chemical Industries, Inc. (Ticker: SCOK) typically sees average daily options volume of around 42 contracts, but today, with shares in the name spiking more than 200% intraday to $8.96, options volume has surged to more than 1,300 contracts as of 11:15 am ET. Much of the volume is centered at the Sep 7.5 strike, with around 630 of the calls at that strike changing hands and 290 puts against zero open positions. Traders appear to be buying the Sep 7.5 strike calls for an average premium of $0.83 as of the time of this writing. Shares in the name appear to have spiked after the company announced some details regarding a new underground coal gasification project, per a brief article released by Reuters. Volume in SCOK shares have exploded, with more than 15.5 million shares traded as of 11:25 am ET versus average daily volume of around 300,000 shares.

Chart – SCOK shares spike on heavy volume


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Chart School

ECRI Recession Watch: Weekly Update

Courtesy of Doug Short.

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) is at 133.2, up from the previous week's 132.0. The WLI annualized growth indicator (WLIg) is at -2.4, down from -2.9 the previous week.

ECRI has been at the center of a prolonged controversy since publicizing its recession call on September 30, 2011. The company had made the announcement to its private clients on September 21st. ECRI's cofounder and spokesman, Lakshman Achuthan, subsequently forecast that the recession would begin in Q1 2012, or Q2 at the latest. He later identified mid-2012 as the start of the recession. Over the past two years he has been a frequent guest on the likes of CNBC and Bloomberg TV. In recent months he has adju...



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Zero Hedge

US Equities Give Back All PBOC Rate-Cut Gains

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

As we already noted, Draghi's comments had no impact whatsoever on US equities overnight but when the PBOC rate-cut news hit, AUD surged and so did US equity futures... all the way into the US Open (and OPEX pins). From that moment, the selling began and as Goldman noted, the rate cut was only "slightly useful," which was later confirmed by the PBOC mouthpiece Xinhua saying "this is not a signal of a big liquidity ease." Stocks have retraced all their gains...

 

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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Phil's Favorites

Hugh Hendry And The Deflationary Zeitgeist

Courtesy of The Automatic Earth.


Jack Delano Colored drivers entrance, U.S. 1, NY Avenue, Washington, DC Jun 1940

It’s funny how things roll at times. When I wrote yesterday’s Making Money While The World Burns, and quoted Hugh Hendry, one of my heroes – well, close, I love the man for his brain – I hesitated, but thought his words were a great way to start a discussion on what people do when faced with certain conundrums. I certainly never meant to attack Hugh, though words can always be construed to mean things they were not meant to mean.

David Stockman picked up the essay (Jim Kunstler told me to use that word) an...



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Market Shadows

EZCH - Not So EZ Year

EZCH - Not So EZ Year

By Ilene 

After a disappointing quarter and some probable tax-selling, EZchip might be a good turnaround for next year.

So I'm thinking we'll sell a stock or two out of Paul's otherwise neglected Virtual Portfolio (check back) and add EZCH.

...

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OpTrader

Swing trading portfolio - week of November 17th, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Sabrient

Sector Detector: Investors make up new rules for their new market paradigm

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of Sabrient Systems and Gradient Analytics

By Scott Martindale

Investors in U.S. equities seem to have embraced a new market paradigm in which upside spikes come more swiftly than the downside selloffs. Remember when it used to be the other way around? When fear was stronger than greed? The market is consolidating its gains off the early-October V-bottom reversal, and no one seems to be in any hurry to unload shares this time around, with the holidays rapidly approaching and all. After all, there are bright blue skies directly overhead giving hope and respite from the early freeze blanketing the country.

In this weekly update, I give my view of the current market environment, offer...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

The newest Stock World Weekly is ready. Click here for the this weekend's reading and sign in with your PSW user name and password. 

Picture credit: AnnaER at Pixabay. 

...

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Digital Currencies

Ukraine Central Bank Bans Bitcoin "To Protect Citizens" From Financing Terrorism

If you would have supposed that Ukraine had enough problems to make banning bitcoins a backburner issue, you'd have been wrong. The rationale, "to protect consumers' rights" makes little to no sense... The other one, "to keep money in the country" makes more sense. 

Ukraine Central Bank Bans Bitcoin "To Protect Citizens" From Financing Terrorism

Courtesy of ZeroHedge. View original post here.

The Hryvnia has collapsed to new record lows near 15/USD this morning. The Central Bank and bankers "agreed to keep UAH at 15-16/USD" but are &qu...



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Option Review

Yamana Gold call options sink

Yamana Gold call options sink

By Andrew Wilkinson at Interactive Brokers

A four-year low for the spot price of gold has had a devastating impact on Yamana Gold (Ticker: AUY), with shares in the name down at the lowest price in six years. Some option traders were especially keen to sell premium and appear to see few signs of a lasting rebound within the next five months. The price of gold suffered again Wednesday as the dollar strengthened and stock prices advanced. The post price of gold fell to $1145 adding further pain to share prices of gold miners. Shares in Yamana Gold tumbled to $3.62 and the lowest price since 2008 as call option sellers used the April expiration contract to write premium at the $5.00 strike. That strike is now 38% above the price of the stock. Premium writers took in around 16-cents per contract o...



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Pharmboy

Biotechs & Bubbles

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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