The recent pullback in the broad markets has trimmed about 4% from the all-time-highs touched in late May, and we have seen a notable uptick in hedges placed to lock in early-year gains, with the single-stock put/call ratio rising from 0.5 to near 0.7 since early May. CBOE VIX Index (VIX) lifting from 14 to 17 over the past two weeks further clarifies a more cautious general sentiment. A number of names continue to see speculative upside action, suggesting a view higher, or possibly a risk-limited way of continuing long exposure into the summer.
We saw an early call buyer in Community Health (CYH) today, paying $4.90 for 1,800 in-the-money September 45 calls to open what will be the largest block in the relatively thin name. Shares are near the 52 week high set earlier this week and this flow might indicate a 'stock replacement' trade, in which a long shareholder converts to a long-call holder to limit downside below the strike.
Beaten down biotech Savient Pharmaceuticals (SVNT) saw one dollar strike call buyers today, as shares briefly touched $0.90 (their highest level since mid-March) before whipping back below $0.80. More than 3,000 September 1 calls have traded at the $0.09 offer in opening flow.
BULLISH flow was seen in SodaStream International (SODA) yesterday, with 13,000 calls trading (15% above normal) and implied volatility increasing almost 7 points to 59%. June 70 calls were the most active, and June 67.50 put buyers stepped in later in the day. Stock was very whippy this morning on some overseas deal chatter that is unconfirmed.
Time Warner Cable (TWC) October 115 calls have been in demand for two days, with 5,000 trading for $0.425 per contract on ISE on Tuesday and Wednesday. Current open interest near 12,600 contracts is the largest block of OI in the name. Bullish trading in TWC comes despite lackluster action in the shares. The stock is down 2.6% year-to-date.
Big blocks of August 36 calls were trading in Williams Company (WMB) on Wednesday when shares were near $34.10, suggesting an institutional view of a good summer for the stock. More than 27K contracts were bought, 5.5% above the current spot, opening a substantial position.