Using “The Dragon� a stock & option screener in OptionsXpress, the following stocks showed some unusual volume activity in the options market. These are just a few of the stocks that were found to have unusual option activity on Monday, April 14th. “The Dragon� is just one of many resource’s that you have access to in your OptionsXpress account. I have found it to be a great way of looking for trade opportunities.
XLF- Financial Select SPDR – Shares in the financial sector ETF slid more than 2% on Wachovia’s write-down, with some 408,000 options trading this afternoon. Where traders appeared to sell front-month volatility in Wachovia, however, I think they’re buying it in the sector ETF. Strong buying interest and similar volumes at the April 25 puts and 26 calls indicate that this is the case, while the same strategy may be in favor between strikes 24 and 25. More bumps in the road for financials…? It bears noting that long volatility plays also generate profits for the buyer with surprises to the upside…and in that spirit, we were interested to note buying interest in June 30 calls, which were a steal at 22 cents today.
PBR- Shares in Brazilian state-run oil company Petroleo Brasiliero rose 8% to $121.93 following reports of a deep off-shore petroleum field discovery that could yield as much as 33 billion barrels of oil, making it the world’s third-largest known source. Not surprisingly, the news sent call volume in Petrobras options to its highest level in at least 52 weeks, with calls out trading puts by 3 to 1 in afternoon market action. Overall, option traders put the equivalent of nearly every fourth Petrobras contract in play. Five-figure volumes were in evidence in front-month calls at strikes of 120 and up to 130 – the value of this position up 600% on the news, even as it reflects just a 16% probability of landing profitably by Friday.
MNST – Monster Worldwide – Shares in the online job site bounced back from session lows at $22.66 (1.5% above Friday’s close) after setting a new 52-week bottom earlier today. On Friday, news site MSNBC announced that it had entered an exclusive partnership with Monster for syndicated nationwide job listings. Options volume pushed to more than 4 times the normal level, with April 22.50 calls bought heavily at double the open interest, buying interest extending one strike higher to the 25 line. In what may be advance positioning ahead of its May 1 earnings report, we observed possible long strangle positioning between the 20 and 25 strikes. This position would cost about $1.85 to enter today, covering the buyer in the event of a break below $18.15 or above $26.85. Implied volatility already shows a sizable elevation above the historic reading in Monster, with the option market currently figuring in nearly a quarter more price risk to the job site’s shares over the coming month than it has shown historically.
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