Today’s tickers: EEM, QCOM, EWZ, FRX, CSX, RIMM & BIIB
EEM iShares MSCI Emerging Market ETF – For the most part, option traders were observed shedding calls and buying puts as though they were going out of style, despite the more than 5.5% rally in shares to $27.09. The trading pattern on the emerging markets ETF was bearish except for one investor who went against the grain today. At the April 25 strike price about 30,500 puts were purchased for an average premium of 48 cents each, while the June contract enticed investors looking for protection at even lower strikes. At the June 21 strike price 10,000 puts were picked up for 66 cents apiece whereas 5,000 puts were coveted at the June 24 strike for 1.37 apiece. Call options were sold in high volume, with 5,000 shed at the in-the-money June 24 strike for 4.45, some traders were seen banking gains on the current share price rally. Similarly, 10,000 calls were sold at the now in-the-money June 27 strike for 2.55 per contract. Some investors do not see the rally continuing through $31.00 by expiration in June as 32,500 calls were shed at the June 31 strike price for 90 cents apiece. Finally, the contrarian trade occurred in the midst of the put buying and call selling late in the trading day. One investor sold 25,000 puts at the June 24 strike for 1.32 each in order to fund the purchase of 25,000 calls at the June 29 strike price for a premium of 1.64. The net cost of getting long of the bullish call options amounts to 32 cents. This optimistic trader will begin to reel in profits if shares can breach the breakeven point at $29.32 by expiration.
QCOM Qualcomm, Inc. – The wireless communications company has experienced a 3% increase in shares to $40.93. QCOM appeared on our ‘most active by options volume’ market scanner as more than 75,000 contracts traded hands throughout the day. Put options traded twice for each call in action yielding a put-to-call ratio of 2.0. The May contract in particular caught our eye as one investor appears to have initiated a ratio put spread. At the May 40 strike price 7,000 puts were purchased for an average premium of 2.37 while the May 35 strike had about 14,000 puts sell for 86 cents apiece. By selling twice as many put options at the 35 strike…
