The market has returned to an area of new all time highs (or close!) and option volume has been relatively strong this week after a few quiet days last Thursday and Friday (when all the movers and shakers were at the Options Industry Conference in Las Vegas). While we've seen a few large protective positions put on in ETFs and broad indexes, my feeling is that these represent some intelligent hedging of early 2013 portfolio gains. A number of names saw notable bullish flow yesterday in the form of opening upside call buying, suggesting a view that whether or not the liquidity-fueled market ascent continues, these stocks may have upside room in the near term.
Waste-to-energy firm Covanta (CVA) saw call buying Tuesday and Wednesday, with volume well above normal and the name and net open interest and ATMIV lifting on both days. Shares slid a bit to close at $19.85 but we will keep a close eye on this one for the remainder of the week.
Beazer Homes (BZH) is up nearly 7% on earnings this morning and flow yesterday was on the right side of this move, with May 16 calls bought for $0.65 and $0.70 when shares were under $16. Looks like some of those were unwound today for $2.
Ciena (CIEN) Early volume Thursday in networking equipment maker CIEN is dominated by May 15 calls, currently 3.8% above spot. Buyer appears t have paid an average price of 36cents for nearly 2000 contracts. Shares at the low end of their YTD range (and about middle of their 52-week range), and today's flow may close an existing short call position.
Buyer appears to be looking for a shift in momentum on Momenta Pharmaceuticals (MNTA) after a slide into earnings this week was followed by further declines that have shares nearly $3 below levels seen earlier this spring. This morning a buyer paid $1.225 for 5,000 Jan14 calls tied delta-neutral to $11.50 stock. Typical volume in MNTA is under 200 calls and this block will open a new position struck more than 20% above spot.