Banks, Telecom Top Options Action
For the first time in what seems like forever, options trading is showing strong signs of interest in financial companies, and some long-awaited takeover talk in telecom.
Rebecca Darst of NYSE Euronext told CNBC that a few minutes after the close of trading on Thursday, there were "buy" imbalances of some seven million shares in both Citigroup and Bank of America and of three and a half million shares in Wells Fargo and JPMorgan Chase.
"For the most part, the options market has positioned with that development, rather than against it," she told CNBC. "In Citigroup, looking at the open interest from day to day, option traders have added twice as many new calls as they have puts."
Darst reports that the "out-lier" among financials is Wells Fargo, with strong upside in its stock price all week, but pressure in the opposite direction in the options market.
"Put open interest has gone up in Wells Fargo by some 25 percent this week alone," she said. "Meanwhile, call open interest has remained relatively flat."
The "takeover chatter" in telecom involves Sprint Nextel.
"There's a rumor going around that maybe Comcast might be interested in acquiring the company," she said. "We saw the options in Sprint trade consistent with that kind of chatter, meaning that we saw a lot of buying momentum in the front-month calls."