Today’s tickers: KCG, CDZI & DRIV
KCG – Knight Capital Group, Inc. – Options activity on Knight Capital Group spiked this morning after the brokerage firm and market maker was linked to unusual trades at the open on NYSE that sparked extreme price volatility in some stocks and triggered circuit breakers that halted trading in several others. Investor concern over the firm’s ties to the trades was quickly reflected in the price of Knight’s shares, which fell more than 25% to $7.60 in the first half of the session. Options volume is currently more than three times the size of overall open interest of 10,969 contracts on the stock, with most of the action in puts as evidenced by the put-to-call ratio of 4.5. Traders scrambled to get long downside puts as the stock spiraled lower this morning, with notable fresh interest building across all available expirations. Front month put volume is heaviest with upwards of 7,000 lots changing hands at each of the Aug. $7.5 and $10 strike prices. Early birds snapping up more than 4,000 of the Aug. $10 strike put this morning at an average premium of $0.68 apiece saw the value of their contracts increase three-fold intraday as premium on the contracts soared to a high of $2.50 prior to midday in New York. Trading traffic in the $7.5 strike puts set to expire in September, October and January ’13 is also noteworthy today as investors await further details and clarity on the morning’s volatility.
CDZI – Cadiz, Inc. – The more than 50% rally in shares of land and water resource management company, Cadiz, Inc., to a near 52-week high of $11.00 today appears to have caught a number of call sellers off guard. Recent selling in front month calls suggests some options traders were not anticipating the pop in Cadiz shares sparked by positive news regarding a project to provide a reliable water supply to 100,000 homes in Southern…
