Friday’s total option volume of 11.9 million contracts resulted in net open interest growth of 2.02 million calls and 1.73 million puts. Sandridge Energy Inc (SD), Bank of America Corporation (BAC), Apple Inc (AAPL) and Nexen Inc (NXY) saw the greatest growth. The top five new positions opened include 35k Sandridge Energy Inc (SD) Dec-12 10 calls, 31k Sandridge Energy Inc (SD) Jun-13 7 calls, 29k Sandridge Energy Inc (SD) Jun-13 9 calls, 28k Sandridge Energy Inc (SD) Dec-12 10 puts and 27k Cheniere Energy Inc (LNG) Mar-13 20 calls.
In U.S. Airways (LCC), there was a buyer of 10,000 Mar 17 calls and 5,000 Mar 18 calls. It appears the pilots union reached a tentative agreement with AMR. This news could help our Delta Air Lines (DAL) position. In Walter Energy (WLT) there has been bullish flow focused in the December 40 and 45 calls on continued M&A speculation. In Tivo (TIVO), there was a buyer of the Jan 12.5 calls and seller of the Jan 11 puts on Friday. This was the second consecutive day of this flow in TIVO. Analysts are expecting TIVO to settle a patent lawsuit with Google near term. Additionally, the company reported better than expected earnings and guidance at the end of November. In Hovnanian (HOV), there was a buyer of 12,000 Dec 5 calls. The company reports earnings on December 13 before the market open. These are in-the-money options and the at-the-money implied volatility is trading at a 52 week high. These trade characteristics signal a high conviction bullish trade.