Weekend Review of Unusual Options Trading (ACOR, CAAS, GME, HK, S, TEVA, VVUS)

Posted in Options 
May 21st, 2011

Each Saturday we usually try to do a review of some unusual options trading at the end of the week.  With Friday being expiration date, that can always mask some of the larger trades.  We tracked unusual options trading in shares of Acorda Therapeutics, Inc. (NASDAQ: ACOR), China Automotive Systems Inc. (NASDAQ: CAAS), GameStop Corp. (NYSE: GME), Petrohawk Energy Corporation (NYSE: HK), Sprint Nextel Corp. (NYSE: S), Teva Pharmaceutical Industries Limited (NASDAQ: TEVA), and in VIVUS Inc. (NASDAQ: VVUS).
 
Acorda Therapeutics, Inc. (NASDAQ: ACOR) was truly an anomaly.  Stories that European Medicines Agency recommended approving Fampyra for MS patients, and with Biogen Idec Inc. (NASDAQ: BIIB) having European drug rights actually have some thinking a takeover is likely.  The stock traded up over 13.7% to $30.38 on 5.5-times normal trading volume of almost 5.4 million shares.  So think about this, like the options players were yelling “Don’t Do It!”: Not a single contract series that expired on Friday for May, nor June, July, or another month saw even 1,000 CALLS trade in a single contract strike price.

China Automotive Systems Inc. (NASDAQ: CAAS) is one that we are not going to opine about because of the issues coming out of so many Chinese companies.  Shares are at $8.04 and we saw 1,116 of the JUNE-2011 $5 PUTS trade hands.  Sound too small? The open interest was only 203 contracts.

GameStop Corp. (NYSE: GME) saw unusual trading roll out in June 2011 with some 7,720 contracts trade against the open interest of 2,920 contracts in the JUNE $28 CALLS.  There were also 1,000 CALLS traded in each of the $29 and $30 strikes for September.  This one has been on a tear as investors started to snap this one back up off the floor. This was under $20.00 as recently as mid-March.

Petrohawk Energy Corporation (NYSE: HK) saw some elevated trading in the JUNE $25 and $26 CALLS with over 9,000 contracts each. This appears to be more bets on the success of the new shale play. Interestingly enough, The $24 PUTS had over 10,000 contracts trade as well versus open interest of 27,259 contracts.

Sprint Nextel Corp. (NYSE: S) showed up as most active in calls with over 100,000 traded.  It looks nothing more than a rolling out of a spread-bet on the $5.00 CALL and $5.50 CALL Strike Prices.  Combined, the two trades were almost 70% of interest in JUNE. 

Teva Pharmaceutical Industries Limited (NASDAQ: TEVA) is having a hard time getting up off the ground even as Big Pharma stocks have been making a comeback.  It looks like we saw seeing naked or covered call writing with over 23,000 of the MAY-2011 $42.50 CALLS with a last trade of $7.20.  Earlier in the week was a huge close-out trade in the MAY-2011 $45.00 CALLS.  This was on options expiration date, so there was a premium capture trade.

VIVUS Inc. (NASDAQ: VVUS) saw unusual options trading with over 3,000 of the SEP-2011 $8 CALLS versus an open interest of 4,465 contracts; there were also over 4,600 of the SEP-2011 $10 CALLS versus an open interest of only 2,008 contracts.  No balancing trades with PUTS were seen.  This is a bet on Qnexa with shares at $8.81.

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JON C. OGG

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