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The following are highlighted options insights and ideas from
Option Traders Look for Volatile January in Financials
Long January volatility plays also showed up in the
Financial Select Sector SPDR
, the basket of money-center banks, including
, that also serves as a popular hedge vehicle against individual components. With shares in the ETF down 2.6% to $13.45 (within a buck of its 52-week low), it looks like a 5,800-lot straddle went through at the January $15 line, with the trader buying the call and put concomitantly for a total premium of $6.65. This position would imply the trader is looking for a recovery in the XLF either above $16.65 or a break below $3.35.
Bank of America
shares are also trading 3.7% lower at $18.76, as options volume is skewed to calls by nearly 3:1. The most eye-catching trade today
Nov. 11 has been a 13,000-lot call spread in January...
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Curious Call-Selling in MF Global as Stock Tanks
Shares in online brokerage
dropped 8% to $2.55, and here the option activity -- three times the normal average -- paints a rather distressing picture. A large chunk of calls, some 4,000-lots worth, sold freshly to the bid at the December 2.50 strike for 50 cents apiece in a transaction that does not appear to have been tied to stock, according to our data sources.
With these contracts to buy MF Global a nickel in the money, a seller of these positions is likely looking to express an eminently bearish view, but doesn't feel a put is worth the cost outlay.
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Jud Pyle (Mad About Options, ONN.tv):
In November, option volume has been running at an 80% pace to year-to-date action. Yesterday
Nov. 10, fewer than 10 million option contracts traded.
As we have already seen examples of, low volume can result in volatile market movement. The actions of one determined or forced seller can spur extreme price movement when volume is low.
Mad About Options: Potash Fertile (Video, Nov. 11)
Jud Pyle and Matt Buckley take a look back at Jim Cramer's comments about
and how their related options trades performed versus the stock trades.
To watch the video, click the player below:
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Plus, don't miss these recent options videos on
Mad About Options: Dipping Into Wells
Mad About Options: Who Cleaned Up With WMI?
(Nov. 10) and
Mad About Options: Hartford Skips a Beat
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This article was written by a staff member of TheStreet.com.