STOCKS NEWS US-Activision option trade boosts volume

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U.S. stock market report 1550 ET 20Aug2010 Activision big option trade fuels volume

Activision Blizzard Inc is flat at $11.06 but in the options market, volume was far above the typical levels after an investor initiated a massive 'risk-reversal' on the video game publisher, said Joe Cusick, senior market analyst at optionsXpress in a report. In morning trading, 25,000 January $15 calls were bought at 11 cents per contract and 25,000 January $10 puts were sold at 52 cents each. There was no apparent news on the stock. Cusick surmised the trade might be a closing position, as open interest is sufficient to cover in both contracts. 'Nevertheless, it seems to reflect expectations that the stock will move higher, not lower, through January 2011,' he said. Overall option volume in ATVI was 8.2 times greater than usual levels with about 30,000 puts and 29,000 calls traded near the close, according to Trade Alert.

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1321 ET 20Aug2010
Put player portends additional declines in global ETF

The iShares MSCI EAFE Index Fund, an exchange-traded fund which tracks international stock performance from Europe, Australasia and the Far East, fell 1.18 percent to $50.24 after notching a low of $50. One options investor, seen bracing for continued bearish movement in the ETF through October expiration, used a put spread. The trader purchased 10,000 puts at the October $50 strike for a premium of $2.31 apiece, and sold the same number of puts at the lower October $45 strike at 86 cents each, resulting in a net cost of $1.45 per contract, said Interactive Brokers Group equity options analyst Caitlin Duffy. The put spreader is prepared to make money, or realize downside protection should he hold a large position in the fund's shares, if EFA shares trade below the break-even price of $48.55 by expiration day. Maximum potential profits of $3.55 per contract are available to the investor if EFA's shares plunge 10 percent to settle below $45 at October expiration, she said. EFA's implied volatility rose 6.8 percent to 29.77 percent as of 1155 EDT.

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1306 ET 20Aug2010
Trader likely closes large Wells Fargo put position

A big put options trade occurred in Wells Fargo & Co earlier in the session which appeared to be an investor closing a position initiated in April. Its shares fell two cents to $24.41 in early afternoon trade. An investor sold 55,000 January $30 puts at $6.25, bought 55,000 January $20 puts at $1.16 and purchased 55,000 January $22.50 puts at $1.87, said WhatsTrading.com option strategist Frederic Ruffy. All this was tied to shares at $24.4 with a 20 delta. Earlier, its shares rose 15 cents to $24.58. This strategist might be closing a position. Ruffy noted that on April 23, the same spread traded 30,000 times. At that time, it seems that the $30 series were being bought and the $20 and $22.50 lines were being sold. 'Shares are down 26.4 percent since that time, resulting in a tidy profit if today's action offsets the spreads initiated at that time,' Ruffy said.

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1154 ET 20Aug2010
Traders circle Terex calls, volume pops up

Shares of Terex Corp, which makes construction equipment, construction and shipping cranes and material handling machinery, rose 2.28 percent to $19.67. The rise in shares was accompanied by call buying which boosted the stock's volume. On Tuesday, it announced two actions to increase its exposure to China. For details, see That followed the company reporting a smaller-than-expected quarterly loss on July 21. Technically, the stock seems to be finding support around its mid-July support level of about $19, said optionMonster co-founder Jon Najarian. By 1150 EDT, about 11,000 calls and 786 puts traded in Terex, or 6.1 times the combined average daily volume, according to Trade Alert. 'There was call buying yesterday and more today, with traders going after the August $17 calls,' Najarian said. August options on individual stocks go off the board after the close. The firm's tracking systems also detected activity in the September $21 call, which traded more than 1,500 times, mostly for 60 to 70 cents per contract, during the early session, he said.

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