STOCK NEWS US-Traders eye later term Intel call options

Tue Nov 12, 2013 2:54pm EST

Real-time equity news [E U] U.S. stock market report 1452 ET 12Nov2013 Traders eye later term Intel call options ------------------------------------------------------------------------------- Some players on Intel Corp appear to be shedding near-term calls and initiating new positions in longer-term options for upside exposure.

The stock is up 25 cents to $24.41 on Tuesday afternoon and in the options market, an investor sold 43,700 November $25 strike Intel calls at 3 cents per contract in what is probably a closing trade before expiration, said WhatsTrading.com options strategist Frederic Ruffy.

In the November $25 calls, volume was 47,644 contracts traded thus far against 67,054 lots in open interest, according to Trade Alert. Separately, but possibly related to the activity in the November $25 strike calls, an investor bought 17,000 December $25 calls on the chipmaker for 28 cents per contract. The December $25 call traded 55,330 times against 80,116 lots in open interest.

The January $25, February $24 and December $24 calls on the stock are also seeing interest, as some players are possibly closing out November $25 calls, but seeking to maintain upside exposure by opening positions in later terms, Ruffy said. The stock, which has seen several months of seesaw action, is at the same levels on Tuesday as six months ago, he added.

Reuters Messaging: doris.frankel.reuters.com@reuters.net 1414 ET 12Nov2013 Bearish action is seen in Facebook options ------------------------------------------------------------------------------- Shares in Facebook Inc rose 0.58 percent to $46.47 on Tuesday afternoon. But options activity on the stock this morning suggests some traders are positioning for the price of the underlying shares to continue lower in the near term, said Interactive Brokers Group equity options analyst Caitlin Duffy in a posting on the firm's website on Tuesday. The stock is down approximately 14 percent since reaching an all-time high of $54.83 on Oct. 18.

Big prints in the weekly $45 strike put options, expiring on Nov. 29, caught Duffy's attention, as more than 13,700 contracts traded thus far in the strike versus open interest of 4,261 contracts. It appears like most of the puts were purchased near the open at a premium of 94 cents each, she said.

Owners of these $45 puts stand ready to profit at expiration in a couple of weeks in the event that Facebook shares trade below the breakeven point at $44.06. Overall options volume on FB is relatively light, with roughly 225,000 contracts in play thus far below the combined recent daily average of 577,000 contracts, Trade Alert figures showed. Calls are more active than puts with the call-to-put ratio hovering near 1.38.

Reuters Messaging: doris.frankel.reuters.com@reuters.net 1337 ET 12Nov2013 Calls on JetBlue fly on broad strength in the airline sector -------------------------------------------------------------------------------

Call options on JetBlue Airways Corp are flying and the stock rose 4.29 percent to $8.02 on broad strength in the airline sector after the U.S. reached an antitrust settlement on the US Airways-American Airlines case.

US Airways Group Inc and American Airlines have agreed to give up landing spots and gates at several U.S. airports to win U.S. antitrust approval for their proposed merger, the Department of Justice said on Tuesday. AMR Corp is the parent of bankrupt American Airlines.

In options trading, a sweep of 5,578 November $8 strike calls traded on JetBlue at Tuesday mid-morning for 20 cents and then 22 minutes later, another 2,576 contracts for 24 cents, followed by another 5,000 for 30 cents, said WhatsTrading.com options strategist Frederic Ruffy.

In all, the November $8 strike call traded 20,811 times thus far against 7,460 contracts in open interest, Trade Alert data showed. The December $7, December $8 and March $8 strike calls are active as well in JetBlue. Overall volume on JBLU is 12 times greater than usual levels with 43,000 calls and 2,394 puts traded as of 1:36 p.m. EST, according to Trade Alert.

Reuters Messaging: doris.frankel.reuters.com@reuters.net

1114 ET 12Nov2013 Volatility ETN VXX draws large long-term put purchase ------------------------------------------------------------------------------- A large put buyer on the iPath S&P 500 VIX Short-Term Futures exchange-traded note appears to be speculating that the fund's shares will be pared by more than half by early 2016.

Shares of VXX, which recently saw a reverse split, are down 21 cents to $48.31 after hitting a new intraday low of $48.14 early on Tuesday.

In the options market, one player bought 63,000 January 2016 $20 puts on the ETN for $3.75 per contract, said WhatsTrading.com options strategist Frederic Ruffy. The hefty premium purchase is probably a play on the longer-term downtrend in shares, which are affected by changes in S&P 500 implied volatility and backwardation/contango in the VIX futures market, he added.

The ETN is based on the two front-month VIX futures, which typically carry a premium to the CBOE Volatility Index or VIX.

Reuters Messaging: doris.frankel.reuters.com@reuters.net

1036 ET 12Nov2013 Strategists highlight key options trades this week ------------------------------------------------------------------------------- Option order flow was muted on Monday, but there was interest to roll out protection from November to year-end in the emerging markets space, strategists said on Tuesday. About 640,000 puts traded in the iShares MSCI Emerging Market Fund on Monday versus 156,000 calls, according to Trade Alert. Shares of the exchange-traded fund closed at $40.95. One hefty put spread drove the higher volumes, as an investor was apparently selling 210,950 November $42.50 strike puts on the EEM for $1.60 and buying 250,000 December $41.5 puts for $1.55 per contract, said WhatsTrading.com options strategist Frederic Ruffy.

Looking at open interest and trade history, the activity in the November $42.50 puts appears to be closing a position initiated a few weeks ago when EEM was trading around $42.55. A new position was opened in the December $41.5 puts. The position adjustment appears to be expressing concerns about additional losses for emerging markets over the next six weeks, Ruffy said. "These sorts of flows typically result in a steeping of EEM skew as put buyers overmatch those in demand for calls," Credit Suisse derivative strategists said in a report on Tuesday. Of note was another print for the ETF on Monday where an investor bet against EEM skew by selling 30,000 December $38 puts to buy 30,000 December $44 calls and collecting 20 cents for the package, CS said.

In equity options, Microsoft Corp continues to attract heavy call volume as investors digest expected management changes, said Dan Nathan, co-founder and editor of RiskReversal.com in a report late on Monday. A trader on Monday appeared to be taking profits by selling the January $33-$36 call spread, 20,000 times at $2.50 to close a position. In addition, he said there appeared to be a trader rolling up and out a bullish bet by selling 7,100 November $35 strike calls at $2.56 to close a position and bought February $40 strike calls for 74 cents to initiate a new position.

Chinese Internet company SINA Corp reports earnings after the market's close on Tuesday and the options market is implying about a 10 percent move for shares, up or down, Nathan said. The shares have realized an average move of about 6 percent over the past four quarters. With the stock down 15 percent in the last few weeks since making new two-year highs in mid October, a trader closed a bullish bet by selling the December $90-$110 call spread at $1.12, he said. Nathan noted that is appears like an odd sale considering it is a $20 wide call spread with an upcoming event and over a month to expiration in a stock that has the potential to make large moves with or without news.

Facebook stock on Monday logged its third straight close below its 50-day moving average and is approaching key near term technical support at $45, Nathan said. A trader on Monday closed a now seemingly ambitious bullish bet by selling 12,500 December $60 calls at 19 cents, he added. Call activity outweighed puts in the stock on Monday by nearly two to one with a total of 287,000 calls to 150,000 puts, Trade Alert figures showed. The most active line was the December $50 calls with almost 25,000 contracts traded, Nathan said.

Reuters Messaging: doris.frankel.reuters.com@reuters.net

0913 ET 12Nov2013 Total option open interest increases by 3.49 mln contracts ------------------------------------------------------------------------------- A total of 12.6 million contracts changed hands in the U.S.-listed options market on Monday, resulting in net open interest growth of 1.74 million calls and 1.75 million puts, according to Trade Alert.

Alpha Natural Resources Inc, Bank of America Corp, Cisco Systems Inc and Facebook Inc attracted the greatest increase in option open positions, data from Trade Alert showed.

The top five new positions opened include 32,000 Alpha Natural January 2014 $6 strike puts, 30,000 Alpha Natural January $11 strike calls, 25,000 Liberty Global Plc January $90 strike calls, 25,000 Alpha Natural January $9 strike calls and 24,000 Williams Companies Inc January $37 strike calls, Trade Alert said.

Reuters Messaging: doris.frankel.reuters.com@reuters.net

0721 ET 12Nov2013-Economic and earnings diary for Nov. 12 ----------------------------------------------------------------------------- Economic data on Tuesday includes the Chicago Fed National Activity Index, which edged up in September. The Conference Board's employment trend index for October is also due for release.

News Corp is the only S&P 500 still expected to report earnings on Tuesday. D.R. Horton Inc and NRG Energy Inc posted results earlier in the day.

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