Friday’s total option volume of 17.1 million contracts resulted in net open interest growth of 2.25 million calls and 2.82 million puts. Pfizer Inc (PFE), Microsoft Corp (MSFT), American International Group Inc Corp (AIG) and Intel Corporation (INTC) saw the greatest growth. Top five new positions opened include 22k Bank of America Corporation (BAC) Jan-15 12 puts, 21k Intel Corporation (INTC) Jun-13 26 calls, 20k Citigroup Inc (C) Jan-14 40 puts, 17k Affymax Inc (AFFY) Oct-13 2 calls and 14k Smithfield Foods (SFD) Jul-13 32 puts.
Selling on Friday is being attributed to MSCI index rebalancing and some profit taking on a month when the S&P 500 closed 2.1% higher. The market should show some resilience today as new money is put to work. Most of the institutional trading is likely to take place near the close. If the market ends on strength, it suggests institutions are moving new money into equities and increasing their long exposure. A weak market at close suggests there is a good chance that the current pullback in stocks could be more severe than what has been experienced year-to-date. There has not been a 5% pullback in six months. We will be watching the close carefully.
Two stocks that rarely have options trades saw impressive action on Friday measured by call volume relative to open interest. Integra LifeSciences Holdings (IART) and Orthofix International (OFIX) had 119x and 37x normal options volume trade on Friday. In OFIX, the trades were concentrated in the June 30 calls bought to open and in IART, institutional investors bought the June 40 calls opening. In OFIX, there was notable insider buying on May 16, 17 and 21 when the CEO, CFO and a director all bought stock.