With shares trading for $37.38 midday Friday, a 9,500-lot of September 39 calls traded on DOW for $0.39 per contract on CBOE. A buyer initiated the trade, according to a source on the floor. By noon, more than 14,000 contracts traded. By the closing bell, those same calls were trading for more than $0.80 after the stock gained an additional 1.7. August, January and March 39 calls on DOW were active through mid-day Friday as well.
Perhaps the most interesting activity in DOW Friday was in the one-day weekly 38 calls that have since expired. In late-day action, with the stock trading for $37.87, a sweep of 1,435 contracts traded for $0.04 each when the market was $0.00 to $0.04 cents. The interest was unusual because the calls were $0.13 out-of-the-money and only 90 minutes remained in the trading day. Then, Dow continued rallying and hit a high of $38.50. At its best levels, the 38 calls were $0.50 in-the-money and traded for as much as $0.30 per contract.
Bloomberg had an article about the unusual activity in DOW. The piece, titled Dow Calls Hit Five-Month High Amid Activist Speculation also highlighted the increased interest in the September 39 calls on DOW and noted that activist investor Nelson Peltz has amassed a very big stake in peer DuPont (DD), which said last month that it's considering a spinoff or shedding its chemicals performance unit. Now, investors are possibly speculating that DOW is possibly an activist target as well. We'll see. The stock is ticking down $0.19 to $37.85 Monday morning.
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