Today’s tickers: BAC, C, MER, MCO, BCO, GEL & CL
BAC – Bank of America. – The pain continues to trickle down the pipeline for Bank of America whose shares have slipped a further 7.2% to $22.03 today. Options activity at 330,000 is huge for the morning and there are some chunky amounts in play. It has to be said that buyers and sellers are evident throughout today’s activity. We usually try to spot who is initiating the trade, but the two-way activity today makes it hard to discern. We can report that the October 22.5 and 25 strike calls saw more than 40,000 lots trade in total, while the 20 strike puts were mainly bought with premium at 1.05 inferring breakeven at $18.95. The November puts at the 15 strike were sold at 98 cents while the 25 puts were predominantly sold on total volume of 50,000 lots.
C – Citigroup Inc – A near 7% slide to $14.15 for Citigroup shares is accompanied by an elevated reading of implied volatility at 153% – up from 135% yesterday – while option volume is heavy. Put volume outpaced call activity by 30% earlier today with heaviest volume at the October 15 strike where 10,657 lots traded around 2.27. THe November same strike saw 4,000 lots in play at 3.35 while the lower 12.5 and 10 strikes saw 2,000 lots each. The October 20 calls were in most demand with volume of around 11,000 lots at stake.
MER – Merrill Lynch – Like a conjoined twin, shares in Merrill also declined but by a headier 10% to $16.18 – blame it on *risk.* Some 77,500 options are active today, most of it on the call side. In the January series, we can see some 9,800 calls were sold, while 12,778 calls at the higher 37.5 strike traded to the middle of the market masking the traders intent here. We wouldn’t be surprised if this was simple call selling to benefit from time value eroding. Prices are 54 cents at the 30 and 10 cents at the 37.5 strike..
MCO – Moody’s Corp.– Implied Vol +27% to 139% – shares down 2.1% to $27.00. Curious option activity in Moody’s is happening today. In the November contract, the 30 put has traded on volume of 5,247 contracts – just shy of existing open interest. These are in the money and the premium paid was 6.80. Moody’s hit our screen as an equity whose options implied volatility has risen sharply today. In the October contract the 20 strike puts were traded 1800 times at 4.20.
CL – Colgate Palmolive. – open interest in options on this ticker is just below 100,000 and today’s 14,306 current volume stands out as relatively large. With the underlying share price down 4.7% at $68.17 there was interest in the October 70/75 put spread at a net premium of 2.65 while the same strike November call spread traded around 4,000 times.
GEL – Genesis Energy. – Shares of Genesis have take a 14.2% torpedo today, which marks a 52-week low for this pipeline company. Current options open interest of just 3,607 compares to today’s swollen trade at the March 10 strike call where volume of 10,000 traded to the middle of the market for a premium of 1.60 sent up a red flag on our market scanners. The call implied volume of 77% compares to an historic reading of 88% on the share price. While we can’t tell from the mid-market pricing what the intention of investor is today, we would be least surprised if a buyer is looking to benefit from a leveraged rebound. The breakeven is at an achievable $11.60 on the stock and the investor has the benefit of plenty of time through March expiration.
BCO – The Brinks Co. – Shares are unchanged today at $52.05 and there appears to be more of the same call spread activity that we reported in yesterday’s session involving the November 45 and 60 strike calls. Today this spread appears to be going through at a net premium of 7.50 compared to the net debit of 8.10 per contract seen yesterday. Today’s volume of 9,746 lots is the same at both strike prices.
