Wednesday’s total option volume of 14.3 million contracts resulted in net open interest growth of 2.54 million calls and 2.52 million puts. Bank of America Corporation (BAC), Facebook Inc (FB), Clearwire Corporation (CLWR) and MetroPCS Communications Inc (PCS) saw the greatest growth. Top five new positions opened include 40k MetroPCS Communications Inc (PCS) May-13 10 puts, 39k MetroPCS Communications Inc (PCS) May-13 8 puts, 38k Ford Motor Company (F) Jan-13 14 calls, 30k Williams Companies Inc (WMB) Jan-14 40 calls and 24k Williams Companies Inc (WMB) Jan-14 45 calls.
Facebook (FB) was up to $30.59 and its best levels since July amid a flurry of activity after the company scheduled a press event next week. The WSJ apparently broke the story yesterday morning and the report fueled a wide range of speculation about what the company might say, ranging from unveiling a new mobile device to a possible acquisition announcement. Nobody really knows. Yet, investors seem optimistic heading into the event, as the stock is rallying to multi-month highs of more than $30 on heavy turnover of 73 million shares. On the options front, the sentiment is equally bullish as 274K calls and 95K puts traded on FB yesterday. January 30 calls, which expire at the end of next week, were the most active. 25,311 traded. Weekly 30 calls that expire on 1/11 and before the press event have traded 25,310 contracts. Lastly, three of the top four trades in FB yesterday were part of a spread, in which the investor sold 1500 Jan 28 puts on the stock to buy 1500 Jan 31 – 33 calls spreads. 15 cents was paid for the three-way and this is an opening position for a customer account, according to ISEE data.
In Eli Lilly (ELY), a 10000-lot of July 55 calls traded on the stock for $1.36 per contract when the market was $1.32 to $1.36. Implied volatility moved up 4 percent to 18. Bullish trading in LLY occurred after a presentation at a JP Morgan conference yesterday and ahead of earnings, the morning of Jan 29. Shares are also approaching mid-October 52-week highs of $53.81 per share. We issued a trade recommendation yesterday to buy the July 55 calls.
EMC Corp (EMC) is near support at roughly $23.50. This morning, we have already seen unusual bullish flow in the EMC Apr 24 calls, opening. Yesterday, we pointed out unusual flow with nearly 30,000 calls trading which is 3x normal volume. We will keep an eye on this to monitor further developments and possibly recommend our involvement.