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Real-time equity news [E U]U.S. stock market report 1306 ET 29Aug2013 Vodafone weeklies generate big profits for some as shares soar-------------------------------------------------------------------------------- Short-term bullish positions initiated on Vodafone Group lastweek are generating substantial gains for some options traders on Thursday asits U.S.-listed shares rose 7.78 percent to $31.70 after the company said it wasin talks with Verizon Communications to sell its 45 percent stake in their U.S.joint venture, Verizon Wireless. "Buyers of VOD weekly calloptions last Thursday saw a big jump in the value of their contracts overnight,"said Interactive Brokers Group options analyst Caitlin Duffy.
Open interest in contracts that expire at the end of this week is greatestin the Aug. 30 $29.50 and $30 calls, with 344 and 353 open contracts,respectively. Duffy noted that a review of time and sales data in the $29.5strike calls indicates one strategist purchased more than 300 contracts on Aug.22 for a premium of 50 cents. The jump in Vodafone's shares on Thursday hasroughly quadrupled the value of the $29.5 calls versus this time last week to$2.40 per contract as of 11:45 a.m. ET. Similarly, time and sales data suggestsmost of the Aug. 30 $30 strike calls were bought last Friday at 35 cents percontract. Premium required to purchase the $30 calls on Thursday has more thantripled in value to $1.90 each during the session, she said. Overall optionsvolume on Vodafone is running 7.7 times the daily average with 69,000 calls and19,000 puts traded thus far on Thursday afternoon, according to Trade Alert.
Reuters Messaging: doris.frankel.reuters.com@reuters.net 1206 ET 29Aug2013 Strategists look at USO ETF low skew and rise in volatility --------------------------------------------------------------------------------
United States Oil Fund shares fell 0.23 percent to $38.99 and optionvolume on the exchange-traded fund, designed to track crude oil through futurescontracts, is relatively light on Thursday after two heavy days that saw morethan 400,000 contracts traded, according to Trade Alert.
More than 20,000 September $41 strike calls changed hands on Wednesday thisweek, with buyers paying an average of 52 cents apiece and boosting openinterest by 15,000 contracts at the strike, said Trade Alert president HenrySchwartz.
As investors remain focused on Syria, the uncertainty regarding stability inthe region has led to an increase in oil prices and a rise in implied volatilityfor oil-related products.
Derivative strategists at Susquehanna Financial Group highlighted the USO asa proxy for crude prices and looked to its options on what they can tell aboutexpected future crude prices.
Brent crude oil dropped below $116 a barrel on Thursday as the possibilityof a delay in a U.S.-led military strike on Syria helped calm concerns overMiddle East oil supplies. Brent crude for October delivery hit a low of$114.94 a barrel, down $1.67, before recovering to trade around $116.00 by 1350GMT. It jumped over 5 percent in the previous two sessions, posting itsstrongest two-day gain since January 2012..
SFG said that 60-Day implied volatility in USO options rose from 23 percentto 26 percent over the course of the last week, and ranks in the 36th percentilerelative to the last two years in a report.
At the same time, a dramatic shift in skew is seen towards the calls versusputs as investors flock to upside calls to gain exposure to, or protectionagainst increasing crude prices, SFG said.
As a result, 60-Day skew is at two-year lows. SFG looked at October optionsfor expectations for future USO prices and, in turn, future crude prices. Forexample, USO options are pricing in around a 20 percent chance of the USO beingabove $42, corresponding to crude above roughly $116.79, SFG said.
For those who believe the probability of such a move should be higher, callspreads may be particularly attractive as a way to limit cost and capture lowskew, SFG added.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1058 ET 29Aug2013 Strategists highlight this week's option trades --------------------------------------------------------------------------------
Notable takeaways from Wednesday's trading include a steady stream of callbuyers in the SPDR S&P 500 Trust and the Select Sector Financial SPDRFund exchange-traded fund for the second straight day, said derivativestrategists at Susquehanna Financial Group in a recap of this week's trades.
In the SPY fund, various September and October expirations were active,including roughly 25,000 Sep. 6 weekly $166 strike calls, 20,000 September $166strike calls, 25,000 September Quarterly $168 strike calls, 20,000 SeptemberQuarterly $170 strike calls, 10,000 October $169 strike calls and 20,000 October$170 strike calls.
"In the XLF, there has been a significant increase in options flow thisweek, with the volume driven by call buyers," SFG said.
On Wednesday, nearly 110,000 calls had traded by early afternoon, withinvestors buying about 15,000 September $19 strike calls, 25,000 September $20calls and almost 60,000 October $20 calls. SFG noted on Tuesday, in the lasthour of the day with the markets at the lows, an investor bought 30,000 December$21 XLF strike calls.
Also worth noting from Wednesday's session was the return of put buyers inAlerian MLP fund, where investors have been steadily buying protectionin anticipation of Fed tapering action, SFG said.
Elsewhere, with the recent sharp move in the Indian rupee, longer-termoptions in the WisdomTree India Earnings Fund traded unusual volume onWednesday. The April $13 puts were bought 5,000 times, and nearly an hour lateran offer of 25,000 of the same puts was taken with the investor paying $1.425versus $13.05 stock.
In Leap Wireless International Inc, there was an opening buyer onWednesday of 10,000 January $12 put-$16 call strangles for 60 cents, SFG said.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
(Editing by Theodore d'Afflisio and Andre Grenon)
