Wednesday’s total option volume of 23.7 million contracts resulted in net open interest growth of 1.44 million calls and 1.33 million puts. Bank of America Corporation (BAC), Apple Inc (AAPL), Barrick Gold Corporation (ABX) and JP Morgan Chase and Company (JPM) saw the greatest growth. Top five new positions opened include 71k Sprint Nextel Corporation (S) Aug-13 8 calls, 37k Sprint Nextel Corporation (S) Aug-13 7 calls, 27k Microsoft Corp (MSFT) Jun-13 28 puts, 25k Morgan Stanley (MS) Oct-13 15 puts and 24k Morgan Stanley (MS) Oct-13 20 puts.
The options volume of nearly 24 million contracts was a 2013 record and the best volume day in nearly 6 months. The sell-off in Gold on Monday marked the single largest one-day drop in gold in over 30 years. The drop started last Friday with a staggering 400 ton sell trade. 400 tons of gold equals nearly 15% of annual gold mine production. The trade was executed in two tranches, each separated by 30 minutes. It is highly likely that this trade then triggered a series of margin calls and selling driven by automatic sell-stop orders. Clearly, something unusual is happening in the institutional markets that has destabilized equities for the moment.
In Amdox (DOX), 30x the normal flow traded yesterday with 2000 May 35 contracts bought. The company reports earnings on April 30 after market close.
In ON Semiconductor (ONNN), there was a buyer of nearly 8,000 Apr 8 calls and 6,000 May 8 calls. ONNN made clear on CNBC on April 9 that for every 5% move in the yen, their earnings rise by $0.02. The yen currency effect could add 10% to EPS this year. The company reports earnings on May 2.
In Home Loan Servicing Solutions (HLSS), there was 30x normal flow. The activity was concentrated in the Apr 20 puts with more than 5,000 contracts bought to open.