What’s good on the weekend my fellow autists and degenerates?. Swaggy, the options savant, brings you some unusual option flow from the week. I won’t babble too much here, that’s what the blog is for, so lets get to it.
RCII – Rent-A-Center
Spotted some unusual option flow in Rent-A-Center in December 18 CALLs. Player purchased 1,500 CALLs at the $40 strike (33% OTM), stock currently $29.00. Bet size was about $85k and the player is expecting a huge jump in stock price by the end of the year. RCII reports earnings next week August 5th. The strike price was the highest strike price currently available on the option chain and the volume of that trade was about 33% of total open interest for every single option chain available for that stock.
HSBC – HSBC Holdings
HSBC saw some bullish flow with next week’s expiring (Aug 7) calls. A player purchased over 8,000 CALLs at the $23 strike for a premium of $365k. Pretty big bet for a position expiring next week. Of note, HSBC is currently near 52-week low and they report earnings Monday.
WORK – Slack Technologies
I saw some bullish flow roll through WORK last week. Most of it was PUT selling with an expiration in the fall or next year. There was also one interesting position opened that was interesting. A player opened a synthetic long position, which is similar risk to buying shares outright. The play was: 1. Bought to open 15,000 Sept-18 CALLs at $30 strike and 2. Sold to open 15,000 Sept-18 PUTs at $30 strike. Essentially they collect $1.3 million in premium to go long on the stock as long as it stays above $30 by September 18. If the stock closes below $30 they will be assigned over 1,500,000 shares. Of course, they can sell anytime before then, but they are pretty bullish on the stock with this position. Of note, Slack has been hammered in recent weeks due to the increase of competition to their main platform.
MS & JPM – Morgan Stanley & JPM
I’ll categorize these two guys together. Banks have been getting the smack-down over the last several months. Most saw a bit of uptick in call activity coming through last week. Nothing spectacular here, but good to notice an increase in bullish flow as we have recently been starting to see some rotation out of tech. Banks could be due for some positive news, most are near the lows.
VXX – VIX Short-Term Futures
Following up from last week, players are still betting on a decrease in volatility for the short-term after next week. Analyzing some of the plays, it looks like players are expecting the VXX stay in the range between $23 and $27, $currently $29. VXX going down means volatility dropping, which typically is bullish for the market.