Today we saw a an order to buy 4,000 Murphy Oil (MUR), Feb 62.5 Strike Calls for $0.15 hit the trading floor. These calls control 400,000 shares of stock. MUR ($56.45, up $0.58) has been trading an average daily volume of about 1.5 million shares. To be profitable at expiration, the stock must be trading above $62.65. After the huge call order, we saw implied volatility spike and the MUR Feb 62.5 Calls move to $0.35 bid. Volatility spiked so much we saw puts increase in value as the stock price continued to rise. February expiration is two weeks from today.
We saw a massive buyer of 16,000 Toll Brothers (TOL, $36.67, up $0.14) Sep 37 Calls for around $3.50. This order controls 1.6 million shares of Toll Brothers, and is a $5.6 million dollar wager that the stock will be trading over $40.50 at September expiration.
The risk to both of these trades is the premium paid (plus transaction costs) and the potential reward substantial. John Voorheis