Traders are loving the wild rides in the market.
I’m Angela Miles covering Weekly’s options expiring next Friday, 10/24. I’m starting with SPX this week, because in my last weeklys report, there was notable downside put buying around the 1875 strike. Wow, did those traders play it spot on as the S&P 500 plunged! In weekly options expiring next Friday in SPX there is decent volume building in put contracts including the 1,750, 1,775 and 1,825 strikes. Although there are some traders positioning on the upside with 1,900 and 1,910 out-of-the money calls.
Earnings are motivating action in the Weekly’s, especially with big Apple reporting Monday. As AAPL trades around $96 dollars traders are coming for calls ahead of next week’s options expiration. The 103 call strike is the most popular so far on the call side. But, there are also positions on the put side at 93, 94 and 95 strikes as traders prepare for a possible slide in Apple shares after earnings are announced. The straddle (the simultaneous purchase of a put and a call) suggests around a 5% move up or down off Apple’s earnings.
Another big name reporting earnings on Monday: Chipotle. The weekly straddle at the 640 strike prices in at $52. That’s around an 8% move which is higher than the 6% the straddle predicted ahead of previous earnings from CMG.
Tuesday, Coca-Cola (KO) turns in results. Going into Coke’s earnings news the 42 puts strike is getting action as KO trades $42. There are 2,600 of the 42 puts contracts on the tape, which could be derived as sign of conviction.
Yahoo (YHOO) also reports earnings next week. The stock is trading around $37 and there are calls and puts in play. Call options contracts are generating interest in the 38, 40 and 42 lines. On the put side, it’s 34 and 35 strikes. Both of those plays in the calls and the puts could be spreads traders are putting on ahead of earnings. The overall bias however, is on the call side.
Verizon (VZ) is also set to report next week. The stock is trading around a 5-month low. That appears to be motivation for upside call buyers at the 47 and 48 strikes.
Taking a look at a stock that likely to get busy next week off earnings this week: Netflix. The video streaming company revealed weakness in its subscriber numbers and it’s causing trouble for the stock as NFLX trades down $105 dollars, two hours into the trading day, on heavy options volume of 68,000 contracts out of the gate this morning. Going into earnings. puts were heavy and traders on my “In The Money” show might have been preparing for major move. So what’s next? Well, as Netflix is trading around $343 dollars call buyers are stepping up by purchasing call strikes all the way up to 370 into next week’s options expiration. That’s an indication some traders are looking for a bounce.
One name has been added to the list of Weeklys: Actavis.
That’s it for now. Thank you for watching and I hope you will join me on Twitter @AngieMiles