STOCK NEWS US-Volatility ETN VXX draws large long-term put play


Real-time equity news [E U]U.S. stock market report 1114 ET 12Nov2013 Volatility ETN VXX draws large long-term put purchase ------------------------------------------------------------------------------- A large put buyer on the iPath S&P 500 VIX Short-Term Futures exchange-tradednote appears to be speculating that the fund's shares will be pared bymore than half by early 2016.

Shares of VXX, which recently saw a reverse split, are down 21 cents to$48.31 after hitting a new intraday low of $48.14 early on Tuesday.

In the options market, one player bought 63,000 January 2016 $20 puts on theETN for $3.75 per contract, said options strategist FredericRuffy. The hefty premium purchase is probably a play on the longer-termdowntrend in shares, which are affected by changes in S&P 500 implied volatilityand backwardation/contango in the VIX futures market, he added.

The ETN is based on the two front-month VIX futures, which typically carry apremium to the CBOE Volatility Index or VIX.

Reuters Messaging:

1036 ET 12Nov2013 Strategists highlight key options trades this week ------------------------------------------------------------------------------- Option order flow was muted on Monday, but there was interest to roll outprotection from November to year-end in the emerging markets space, strategistssaid on Tuesday. About 640,000 puts traded in the iShares MSCI Emerging MarketFund on Monday versus 156,000 calls, according to Trade Alert. Shares ofthe exchange-traded fund closed at $40.95. One hefty put spread drove the highervolumes, as an investor was apparently selling 210,950 November $42.50 strikeputs on the EEM for $1.60 and buying 250,000 December $41.5 puts for $1.55 percontract, said options strategist Frederic Ruffy.

Looking at open interest and trade history, the activity in the November$42.50 puts appears to be closing a position initiated a few weeks ago when EEMwas trading around $42.55. A new position was opened in the December $41.5 puts.The position adjustment appears to be expressing concerns about additionallosses for emerging markets over the next six weeks, Ruffy said. "These sorts offlows typically result in a steeping of EEM skew as put buyers overmatch thosein demand for calls," Credit Suisse derivative strategists said in a report onTuesday. Of note was another print for the ETF on Monday where an investor betagainst EEM skew by selling 30,000 December $38 puts to buy 30,000 December $44calls and collecting 20 cents for the package, CS said.

In equity options, Microsoft Corp continues to attract heavy callvolume as investors digest expected management changes, said Dan Nathan,co-founder and editor of in a report late on Monday. A traderon Monday appeared to be taking profits by selling the January $33-$36 callspread, 20,000 times at $2.50 to close a position. In addition, he said thereappeared to be a trader rolling up and out a bullish bet by selling 7,100November $35 strike calls at $2.56 to close a position and bought February $40strike calls for 74 cents to initiate a new position.

Chinese Internet company SINA Corp reports earnings after themarket's close on Tuesday and the options market is implying about a 10 percentmove for shares, up or down, Nathan said. The shares have realized an averagemove of about 6 percent over the past four quarters. With the stock down 15percent in the last few weeks since making new two-year highs in mid October, atrader closed a bullish bet by selling the December $90-$110 call spread at$1.12, he said. Nathan noted that is appears like an odd sale considering it isa $20 wide call spread with an upcoming event and over a month to expiration ina stock that has the potential to make large moves with or without news.

Facebook stock on Monday logged its third straight close below its50-day moving average and is approaching key near term technical support at $45,Nathan said. A trader on Monday closed a now seemingly ambitious bullish bet byselling 12,500 December $60 calls at 19 cents, he added. Call activityoutweighed puts in the stock on Monday by nearly two to one with a total of287,000 calls to 150,000 puts, Trade Alert figures showed. The most active linewas the December $50 calls with almost 25,000 contracts traded, Nathan said.

Reuters Messaging:

0913 ET 12Nov2013 Total option open interest increases by 3.49 mln contracts ------------------------------------------------------------------------------- A total of 12.6 million contracts changed hands in the U.S.-listed optionsmarket on Monday, resulting in net open interest growth of 1.74 million callsand 1.75 million puts, according to Trade Alert.

Alpha Natural Resources Inc, Bank of America Corp, CiscoSystems Inc and Facebook Inc attracted the greatest increase inoption open positions, data from Trade Alert showed.

The top five new positions opened include 32,000 Alpha Natural January 2014$6 strike puts, 30,000 Alpha Natural January $11 strike calls, 25,000 LibertyGlobal Plc January $90 strike calls, 25,000 Alpha Natural January $9strike calls and 24,000 Williams Companies Inc January $37 strike calls,Trade Alert said.

Reuters Messaging:

0721 ET 12Nov2013-Economic and earnings diary for Nov. 12-----------------------------------------------------------------------------Economic data on Tuesday includes the Chicago Fed National Activity Index, whichedged up in September. The Conference Board's employment trend index for Octoberis also due for release.

News Corp is the only S&P 500 still expected to report earnings onTuesday. D.R. Horton Inc and NRG Energy Inc posted resultsearlier in the day.

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