Usually the ex-div trading doesnt start until the afternoon, but today's short session has motivated some traders that engage in the strategy to get going early. More than half a million Coke calls have traded in the first hour, all in the Jan 47.5 to 60 strikes and likely a safe distance in-the-money from $64.31 current spot level. Coke nearly hit one million calls on Sep 10, the prior ex-div date, and traders are likely hoping the timing of Mondays ex-div will work in their favor, as some long call holders away for the holiday forget to call in their exercise instructions. (MCD, LO, GR, WM also seeing ex-div trades.)
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Pfizer Inc (PFE) $16.55 -0.85%Pfizer (PFE) loses 17 cents to $16.52 and is one of 28 Dow stocks under water Friday morning (only MMM and CSCO are up). Meanwhile, in options action, PFE Jan calls are seeing interest. One of the top trades is 2094 Jan 17.5s at 18 cents on the ISE, and an opening customer buyer, according to ISEE data. 5200 now traded (98 percent Ask). Another 6200 Jan 20s changed hands (72 percent Ask). No news on the pharmaceutical maker today. Earnings were reported on 11/2. Shares are down 5.3 percent since that time.
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Amazon com (AMZN) $177.28 +5.40%Amazon.com (AMZN) touched a new 52-week high and is up $9.49 to $177.49. Meanwhile, options is running 2X the normal after Citigroup analysts said in a note today that AMZN is the "single best play for secular growth in online retail". Earlier this week, Amazon.com unveiled a new app that allows shoppers to compare prices across brick and mortar retailers, and then buy the product instantaneously online if the best price exists at Amazon.com. Indeed, there seems to be some enthusiasm for the online retailer heading into Black Friday as the AMZN Weekly (11/26) 175 and 180 calls have both traded more than 10000X today. 90,000 calls and 60,000 puts now traded in AMZN. Implied volatility is flat at 35, compared to a 52-week high and low of 55 and 28.
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Massive Put Purchases in XLI, XLY, XLFMassive blocks of puts trade on a number of exchange-traded funds midday Wednesday. 113,934 Jan 19 puts traded at a penny on the Consumer Discretionary Fund (XLY), 113,882 Financial Select Sector (XLF) Jan 9 puts at a penny each, and 113,882 Industrials Select Sector Fund (XLI) Jan 19 puts, also at a penny per contract. Given that open interest is sufficient to cover in all three contracts, the action looks closing and offsetting positions opened in mid-August. For example, on August 11 of this year, 37,962 XLF Jan 9 puts traded on the 16-cent bid and on August 19, we observed a writer of 57,000 XLI Jan 19 puts at 32 cents per contract. These appear to be very well-timed plays because stocks are broadly higher since then and the S&P 500 has added nearly 14 percent since late-August. Now, this strategist seems willing to pay a penny per contract plus the transaction costs to offset the positions, perhaps looking to free up capital and or bank the profit now rather than deal with the risks associated with holding the positions through January 2011.
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Istar Financial Inc (SFI) $5.63 +4.45%iStar Financial (SFI) adds 23 cents to $5.62 and 2000 July 6 calls were sold at $1.25 each. It was part of an opening buy-write and tied to stock at $5.61 (1.64 over), according to a source on the floor. Shares are up 63.8 percent since the company reported earnings on 10/28 and announced plans to repay $1 billion in debt.
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EOG Resources Inc (EOG) $88.95 +0.28%EOG adds 30 cents to $88.99 and a block of 6,160 Jan 105 calls traded at 47 cents per contract when the market was 49 to 54 cents. Looks like a call sale and possibly closing. Open interest in the contract, which is 18 percent out-of-the-money, is 13,100 and the biggest position in the name. The Houston, TX natural gas producer reported earnings on 11/2. Shares tumbled 9.3 percent on the news.
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AMR loses 17 cents to $8.05 and options on the airliner are busy today. Dec 7 and 9 calls were active this morning on takeover chatter, according to Briefing. Recent trades include a buyer of 7550 Jan 7.5 puts at the 50-cent asking price. It was bought and tied to shares (33 delta), according to a source on the floor. 11,140 now traded. Implied volatility in AMR is up 8 percent to 54. Delta puts were actively traded yesterday. Some players might be taking positions in anticipation of increased volatility heading into the busiest period for US travel. Things might get dicey at some of the major airports due to the recent uproar over TSA security procedures, which now include full body scans and uncomfortable law enforcement-style pat downs. According to the Associated Press, A loosely organized Internet campaign is urging people to refuse the scans on Wednesday in what is being called National Opt-Out Day.
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Alpha Natural Resources Inc (ANR) $50.62 -1.78%Alpha Natural Resources (ANR), which rallied 8.1 percent Friday on reports the company is seeking to expand its metallurgical coal holdings (Bloomberg), is down $1.05 to $50.49 midday Tuesday. Meanwhile, 10,370 March 55 calls traded. The top trade is 1500 at $3.60 when the market was $3.40 to $3.60. In all, 79 percent traded at the ask and, with open interest of just 221 contracts, it looks like call buyers are opening new bullish positions in ANR. Jan 49 puts and Jan 52.5 calls are seeing interest as well. Implied volatility is up 2.5 percent to 47.
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Nuance Communications Inc (NUAN) $17.96 +4.97%Nuance (NUAN) adds 71 cents to $17.82 and 16,000 calls traded on the Burlington, MA application software developer. Shares hit a morning high of $19.19 after the company released earnings after the close of trading yesterday. The stock is also in the spotlight after TechCrunch published a piece this morning dispelling the idea that Apple Computer (AAPL) is acquiring NUAN. The TechCrunch story was in response to recent comments from Apple co-founder Steve Wozniak, who in a video interview last night apparently incorrectly mentioned that Apple "recently bought the company Nuance." In any event, NUAN is off session highs and options action is brisk. December 15, 17, 19, 20 and 21 calls are the most actives. Implied volatility is up about 15 percent to 47.
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Electronic Arts Inc (ERTS) $14.96 -2.92%Electronic Arts (ERTS) loses 41 cents to $15 and one strategist sells 75,000 ERTS January 20 calls at 7 cents to buy 40,000 Mar 20 calls at 25 cents. Since the Jan 20s have more than 90K in open interest, this is possibly a roll. If so, it closes out a position in Jan 20 calls opened in late-June and July. With shares down 15.3 percent since 10/11, these calls are now $5 out-of-the-money. The strategist might now be opening in March to buy an additional two months for the trade to play out.
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