Thursday's Notable Options Activity: Bank Of America, Yahoo

August 22, 2014 9:40 AM

Another new all-time closing high for the S&P 500 index ahead of Janet Yellen’s highly anticipated Jackson Hole commentary today, scheduled for 10:00 am EDT.  The CBOE composite put/call ratio closed at 0.70, its lowest level since late June.

1.  YHOO - Bullish trade in YHOO printed in the morning – buyer of 21,500 x 43,000 x 21,500 of the Oct 40/43/46 call butterfly to open for $0.38.  More of that butterfly traded later in the session.  YHOO remains near its highest level since mid-March, though the $40 level is important resistance that has not been touched since March 5th.  30 day implied volatility in YHOO is around 42.50, near a 6 month high, in anticipation of the Alibaba IPO expected in mid-September.  

2.  BAC - Stock broke above $16 resistance on its largest volume since late April, after announcing a comprehensive settlement with the Justice Department.  Calls traded nearly 5x the average one month volume, led by the Sept 16 calls and the Jan15 17 calls, both of which traded over 50k on the day.  30 day implied volatility rebounded from a 2 year low, rising to around 18.50 from below 17 earlier this week.

3.  JPM -The Jan15 60 calls traded nearly 30k on the day at an average price of $1.53, mostly buyer initiated.  JPM rose 1.5% on the back of broad strength in the financial sector yesterday.  The stock last traded above $60 in early April.

4.  T - The Sept 34.5 puts traded over 28k at an average price of 0.404, mostly buyer initiated in the afternoon.  $34 is important support for T, which is currently down 1.5% year-to-date.

5.  MCD - MCD is one the main large cap laggards so far year-to-date, down 2.5% in 2014.  However, the stock has held above $92.50 support on the selling in the past month, and yesterday a trader bought 15k of the Nov 95 calls for 1.81 to open.

6.  TER - The Oct 21 calls traded nearly 20k at an average price of $0.66, mostly buyers paying the offer.  Teradyne options are rarely traded, and the activity is likely related to more speculation about consolidation in the semiconductor sector after the latest acquisition of IRF.  TER’s high of the year is $20.72 from April, and the stock has not traded above $21 since 2004.

This post by Enis Taner (@enistaner) originally appeared on RiskReversal.com

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