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Friday, April 19, 2024

Big Print In SPY Calls Sees Fresh Highs On Horizon


Today’s tickers: SPY, INTC & VMED

SPY – SPDR S&P 500 ETF – A large trade in SPY call options, one that comprised more than 15% of the 630,000 options contracts that had changed hands on the ETF by 11:05 a.m. ET on Thursday morning, appear to be a massive bullish play that looks for the S&P 500 Index to rise to fresh five-year highs next week. Shares in the SPY, an ETF that tracks the performance of the S&P 500 Index, are moving higher for a third consecutive session, up 0.45% at $147.71, helped by a decline in initial jobless claims, strong housing starts and better-than-expected corporate earnings reports. The outright purchase of 100,000 calls at the Jan. 25 ’13 $150 strike at a premium of $0.165 per contract benefits from continued gains in the price of the underlying fund during the next six trading sessions. The position may be profitable at expiration next week should SPY shares tack on another 1.7% to top the effective breakeven price of $150.165, the highest level since 2007.

INTC – Intel Corp. – Options volume on chip maker, Intel Corp., is on pace to surpass its daily average of approximately 155,300 contracts this morning, with overall options volume on the stock topping 150,000 contracts as of 10:55 a.m. ET. Upside calls on Intel are active, with shares in the name up 1.2% on the session at $22.37, ahead of the company’s fourth-quarter earnings report set for release after the closing bell today. Call options set to expire at the end of the trading week are seeing the most action this morning, specifically the Jan. $23.5 strike contracts. Upwards of 48,000 calls have changed hands at the $23.5 striking price, versus previously existing open interest of 11,801 contracts. It looks like most of the contracts were purchased in the early going for an average premium of $0.12 apiece. Bullish calls may be profitable at expiration should Intel’s shares surge 5.6% post-earnings to exceed the average breakeven price of $23.62. Like-minded strategists snapped up 3,000 weekly calls out at the Jan. 25 ’13 $23.5 strike for an average premium of $0.15 each, as well.

VMED – Virgin Media, Inc. – Bearish puts are in play on the U.K. provider of broadband Internet, television and telephone services this morning, as shares in Virgin Media trade 0.70% lower on the session to stand at $38.43 just before midday in New York. Fresh interest in the February expiry put options on VMED may be the work of one or more traders securing downside protection ahead of the company’s fourth-quarter earnings report next month. The Feb. $35 strike put options are most active, with around 3,800 lots in play against open interest of 828 contracts. It looks like most of the put options were purchased within the first 15 minutes of the trading day for an average premium of $0.25 each. Profits, or downside protection, kick in if shares in Virgin Media drop nearly 10% from the current price of $38.43 to breach the breakeven point at $34.75 by February expiration. Shares in VMED, up nearly 60% in the past six months, last traded below $34.75 in November 2012.


Caitlin Duffy
Equity Options Analyst

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