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Daily Stock Market Equity and Options Trading Commentary

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Wednesday, October 28, 2009

Most Active Stock Options October 27, 2009 & Trading Activity

The top ten most active stock option contracts traded today were:
  1. Bank of America (NYSE:BAC) November 17.5 Call Options
  2. Bank of America November 16 Call Options
  3. S&P 500 Index Options (SPX) December 2010 500 Put Options
  4. ConocoPhillips (NYSE:COP) January 40 Call Options
  5. S&P 500 SPDR (NYSE:SPY) November 107 Put Options
  6. Chesapeake (NYSE:CHK) January 2011 30 Call Options
  7. Citigroup (NYSE:C) November 5 Call Options
  8. ConocoPhillips November 45 Call Options
  9. S&P 500 SPDR November 106 Put Options
  10. S&P 500 Index Options December 2010 600 Put Options
It seems as if traders became bullish on Bank of America, and I noticed this as the stock moved off of its lows of 15.02 to finish the day higher. I believe this could have been a key reversal day for Bank of America, and think we could see it shoot back up to 17 per share range in no time with the help of the overall market. It looks as if there is some extremely bearish betting going on for the S&P 500 Index options, however this could be considered as a very cheap form of protection and nothing more. Almost exactly 2 500 strike put index options sold for every 1 600 strike put option. This is most likely a 2:1 ratio put spread, and ran for roughly $90 per spread (at last prices). A very cheap form of protection considering the break even is roughly 300 on the S&P 500 index, and would return a maximum gain of $10,000 per $90 spent if the S&P closed at 400 on December 2010 expiration. The ConocoPhillips (COP) and Chesapeake (CHK) calls traded today were among the most active because they are both spinning dividends out tomorrow morning. Today, I sold put options for the 72.50 on Visa, and went long the December 85 Call options with the premium received. I also opened a ratio put spread on Visa by purchasing one 70 strike put option for every three 67.50 strike put options sold. I did end up selling both the 40 and 35 strike put options on Buffalo Wild Wings and purchased the December 50 strike call options with the premium received. It looks as if BWLD is weaker after they came out with earnings, but it is a very lightly traded stock so it is hard to get a good read after hours. I also sold several put options for the Norfolk Southern (NSC) November 42 strike. Will look to buy back my puts on strength in the underlying names tomorrow. Happy trading! Sphere: Related Content

3 comments:

investor said...

Pleas share your thoughts regarding Micron Technology. MU

Anonymous said...

I sold and bought the Visa puts for a one day trade. Thanks. Let me know if the ratio put spread will work on today's post earnings values. Thanks Howard

dcatlowpj said...

These are great trades, Marco and I am following you now every day!

The VISA trade...well, I missed it - - damn! Great call on that one.

Dave

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