A large move by an options trading investor in the in-play NYSE Euronext (NYSE: NYX) doesn’t seem to see the stock going much higher, despite the fact that there’s a battle to take over the firm.
The stock of NYX, owner of the New York Stock Exchange, has jumped on a higher bid for the exchange owner from Nasdaq OMX Group (NASDAQ: NDAQ) and Intercontinental Exchange (NYSE: ICE).
NYX is up 11.52% to $39.22 after the hostile bid of $42.50 in cash and stock for each NYX share. An earlier offer from Deutsche Boerse was roughly $35.04 a share.
The options are quite active, with more than 70,000 contracts already trading this morning. Topping the volume list is an interesting call spread.
OptionMONSTER’s systems show that NYX 6,300 April 34 Calls traded for $5.20 against open interest of more than 12,000. Seconds later, 6,300 NYX June 37 Calls traded for $2.80. That volume is more than twice the previous open interest.
So it appears that this is a roll from April to June as the stock surges. But the interesting part is that the April calls were apparently bought and the June calls sold, which would indicate a roll of a short call position.
This is very likely done against long stock as a covered call position. Currently those June $37 calls have a small amount of time value, but the trade may be part of a larger merger arbitrage-type strategy.
Find more option analysis and trading ideas at Options Trading Strategies.
A large options trade in Eastman Kodak (NYSE: EK) indicates a trader believes the stock has found its floor, despite a sell off in the stock this week.
EK trades at $3.29 up 1.86% on the day. The imaging company’s shares opened at $4 on Monday, which was the highest level for the stock since Jan. 26. EK was trading just under $6 in December and much of January before falling to a multi-year low of $2.90 in mid-March.
In today’s volume our systems show that a trader sold 3,000 EK May 3 Puts for $0.22 in one large block that was above open interest, indicating that it was a new opening position.
Put selling is a bet that the stock will stay above the $3 strike price. If it is below that level at expiration, those still holding short puts will be obligated to buy stock, which is sometimes the intention of investors who are looking to purchase shares at a lower price.
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