With an OPEC meeting in the offing and oil services stocks running, options traders have begun to stake out some positions in the
Philadelphia Stock Exchange
Oil Services index and components to play any fallout from the meeting scheduled for March 27.
The Oil Services index was up 6.28, to 111.13, at midday and names such as
saw interest in both their shares and options.
Philly floor sources said volatility was up throughout the sector ahead of the OPEC meeting but that the index wasn't seeing a flood of volume yet.
Halliburton, up 1 7/8 to 39 3/8, saw volume head into its May 40 calls. More than 1500 contracts traded and sent the price of the play up 7/8 ($87.50) to 3 3/4 ($375). Volume wasn't as heavy in Halliburton's April calls but prices were increasing steadily.
The April 40 calls, for instance, traded about 200 contracts, but their premium increased 7/8 ($87.50) to 2 5/8 ($262.50).
With Schlumberger up 4 to 76 at midday, traders went for its out-of-the-money April 80 calls. Volume at that strike hit almost 300 contracts and jumped 1 3/8 ($137.50) to 3 ($300).
Paul Foster, the options strategist at
, said traders were setting up their positions ahead of the OPEC meeting but that he wasn't seeing many great opportunities in the sector.
The one big trade in the Oil Services index was from an index player who closed 1100 April 115 puts and opened a similar amount of June 105 puts.
The Old/New Economy stocks saw their second day of heavy options activity, especially in
Foster said traders may be playing AOL for a strong comeback from the doldrums that set in after the announcement of its merger with
. "It's a traditional buy on the dip play, trying to take AOL back up," he said.
Trying to do that today meant buying AOL calls by the bushel. A day after the company announced that its customer base had risen to 22 million users, the stock was up 2 11/16 to 70 1/16.
As a result of that strength, AOL's April 60 calls traded almost 20,000 contracts, part of that likely closing out some of the huge open interest at the strike price. More than 81,000 April 60 call contracts had been opened before today's session.
The out-of-the-money April 70 calls also saw heavy volume, trading more than 3500 contracts, but much of that seemed to have been inspired by call selling. The price of the April 70 calls stood at 3 5/8 ($362.50), up just 3/8 ($37.50) halfway through the session.