Unusual Option Activity - Feb 9, 2010

During the normal trading hours, it is difficult to gauge every unusual option activity and have enough time to convey on my blog.  Therefore, starting from today each night after the market close I will run the scans and present a list of as many unusual option activity as I can find.  If I miss something, readers are welcome to drop them in the comment section.  So, here they are:


BAC - Bullish risk reversal: Traders sold 6000 Aug $12 puts for $0.86 to partially finance the purchase of Aug $16 calls for $1.12.  Net cost was $0.26 per contract.  Shares need to rally 12% to $16.26 by Aug expiration.  BAC shares traded above $16.50 as recently as Jan 20, 2010.


PBR - Traders sold 15,000 contracts of Feb $39 puts for an average price of $0.83 after the company announced natural gas output will increase to 93 million cm in 2011 from 85 million cm in the current year.  


MAC - Traders went out in Sept and bought 4700 contracts of $25 puts for an average price of $2.55.  Previously established open interest was only 99, so this is a clear bearish bet.  Earnings out on 2/11/10 before market opens. 


FSLR - Large butterfly call spread out in Sept where 1,000 contracts of the $135/$155 wings were bought and 2,000 contracts of $145 calls were sold, looking for a decline in IV and shares to be around 30% higher in 7 months.  


CYBS - Bullish risk reversal as one trader sold April $15 puts and bought April $20 calls for a net credit of $0.10.  Shares are touching the 200 day EMA here, and the trader is willing to get long shares around $15, but is looking to capitalize on a leveraged bet for a move higher.  There is a 12.9% short float, 13.8 days to cover, that could cause a squeeze higher.  


CCI - Trader bought 5,000 July $30 puts at $1.10 against previously established open interest of only 65.  Straight bearish bet.  Despite all the rhetoric from Cramer, bearish bets against cell tower stocks (SBAC, AMT) continue.


NDAQ - Bullish risk reversal as traders sold 5,000 contracts of June $17 puts for $0.95, and bought 5,000 times of June 19/21 call spread for $0.80 cents.  NDAQ has a lot of support around $18 and the stock is a great long term value play.  


MR - Traders sold 2000 contracts of March $35 puts on the bid against open interest of only 144.  Someone obviously wants to get long if the stock falls below $35.  


CQB - A single buyer bought 4000 contracts of Aug $15 calls on the offer price between $2.15 and $2.25.  Previously established open interest is only 82.  Very bullish.


MCO - Someone is betting that MCO is not going anywhere anytime soon by selling out-of-money strangle.  The trader sold 5000 contracts of March $25 puts and sold 5000 contracts of March $28 calls for a net credit of $1.57.  Earnings are out on 4/29/10, so selling the strangle in March makes sense.  


SCHW - Someone betting the online broker is about to fall off a cliff.  A trader bought 5000 contracts of March $16 puts at 3:53 pm EST on the offer price of $0.35.  Earnings announced already on Jan 19.    


That's it for today.  It is important to keep an eye on these unusual activities on a daily basis because if they're related to earnings or other major announcement, many times the most unusual trades happen several days or weeks before the event.  By keeping a tally of sentiment, it provides us better clues when the time comes to pull the trigger.  


Feel free to drop in the comment section if I miss anything.  


Good luck!