November 12, 2013 / 6:45 PM / 4 years ago

STOCK NEWS US-Call options on JetBlue Airways take off

Real-time equity news [E U] U.S. stock market report 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 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:

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 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:

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 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 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:

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:

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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