While You Were Braking Your Camry

• Posted by Adam Warner
• on February 3rd, 2010

Some interesting trades from yesterday via Cuttone and Company

One trader is looking to take advantage of the elevated volatility in Kraft Foods Inc. (KFT $28.5). They sold the June 27 – 30 strangle for  $1.80 premium 14,000x. The bet is that Kraft remains above $25.2 and below $31.80 through June expiration.

In the PowerShares DB Agriculture Fund (DBA $25.65), someone is looking for some more upside as the commodity space moved north. The February 26 calls were purchased 15,600x for $.17,untied. Implied volatility in the ETF is close to 6 month lows as the chart reflects.

There was also a buyer of some downside in the SPY ETF (SPY $110.38). One firm came in near day’s end and purchased 35,000 February 109 puts @ $1.27 tied to $110.25 in the cash. The 109 line was quite active as over 64,000 contracts traded on the day. On a day that the S&P closed up 1%, 505,664 SPY calls traded vs. 637,101 puts.

One large trader is positioning for calmer seas as they purchased 105,000 VIX March 20 puts for $.70. That was by far the largest trade of the day in the VIX pit. The SPX option Pit was also somewhat quiet on the rally.

As always with VIX trades, remember that it’s a VIX Future, and March has a premium again so these are further OTM than meet the eye.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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