Friday’s total option volume of 13.6 million contracts resulted in net open interest growth of 2.48 million calls and 2.60 million puts. Starwood Hotels and Resorts Worldwide Inc (HOT), Bank of America Corporation (BAC), Apple Inc (AAPL) and Research In Motion Ltd (BBRY) saw the greatest growth. Top five new positions opened include 121k Starwood Hotels and Resorts Worldwide Inc (HOT) May-13 65 calls, 121k Starwood Hotels and Resorts Worldwide Inc (HOT) Jan-14 70 calls, 27k Eldorado Gold Corp Ltd (EGO) Jul-13 10 calls, 24k ConocoPhillips (COP) Apr-13 62.5 calls and 23k Intel Corporation (INTC) Apr-13 21 puts.
In Quality Systems, Inc. (QSII), 50x the normal options volume traded on Friday with the bulk of the action being in the April and May 20 calls, bought to open. QSII broke down last July and has been trading between $16 and $20 since then. If these options are to make money, QSII would have to break out through the top of the range. A break out likely would be followed with the stock “filling the gap” and rising to roughly $25.
In Level 3 Communications (LVLT), there was a buyer of 2,800 Jan 2014 20 strike calls. The stock closed on Friday at $20.04 which is the low-end of the range. This morning, the company announced it has signed an agreement to serve as the primary content delivery network provider for Gamezhero, an online gaming company. This is a small positive announcement. It is likely the options were bought for a larger positive catalyst yet to be announced.
In Silicon Graphics (SGI), the stock broke down sharply (-7%) on Friday. It is unclear what the catalyst is. There was also a buyer of roughly 2,300 April 15 puts. This was nearly 16x normal flow. Clearly there is some reason for this stock to decline that has yet to be widely known. If SGI were to bounce in the short-term, this might make an excellent candidate for some put buying.