Guess Who Out-traded Apple and Facebook Yesterday: Options Recap


Normally big tech companies dominate activity in the options market. But not yesterday.

The busiest underliers, after all, are usually companies like Apple (AAPL), Facebook (FB), Micron Technology (MU) and Nvidia (NVDA). But on Wednesday all of those were outdone by a poster child for the old economy: deep-sea driller Transocean (RIG). Here’s how it played out:

  • A block of 175,000 RIG January 10 puts were sold in the final hour of trading for $0.32.
  • At the same second, an equal number of January 12 puts was bought for $0.84.

Volume was below open interest at the lower strike, so there are two possible explanations for the activity.

First, the trader may have previously owned the 10 puts and rolled the position up by $2 in order to tighten a protective hedge on the shares. Alternately, he or she might have opened a new bearish spread that will leverage a drop to $10. (See our Knowledge Center.)

Either way, the transaction had a net cost of $0.52 and will profit from the stock moving lower through early next year.

RIG fell 3.75 percent to $13.55 yesterday. However it’s up 5 percent in the last month and hit a new 52-week high earlier in the week.

TradeStation Hot Lists app showing busiest underliers yesterday. Notice only exchange-traded funds surpassed RIG.
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David Russell is Global Head of Market Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.