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Msg  174654 of 184377  at  6/19/2019 5:06:50 PM  by

sandiegodude2000


VHC Action // Slow Day for the PPS // The Real Action is in the Pit

Unlike yesterday when VHC approached its high bar of $6.65, today's action was rather
quiet, with a high of just $6.47. However, down in the pit, option traders were busy as
2814 contracts crossed the tape. Yes, some of it pertained to closing out Jun options, but
you'll see below significant action in other months. Quite a few option traders are
looking past the CAFC ruling to put in place VHC theses for the post-CAFC era.
 
PPS: $6.46, up 2 cents (+0%)
Range: $6.27 - $6.50 (down 10 cents on the low end, down 12 cents on the high end)
Share Volume: 289K, down 28K shares
Option Volume: 2814 (2404C, 510P), up 1191 contracts
IV: 84%, down 8%
VWAP: $6.398, down $0.092
 
Takeaways: While the pps closed 2 cents higher, VWAP ended the day 9 cents lower,
showing that VHC is pretty much ensconced in this $6 - $6.65 pre-CAFC comfort zone. 
So the stock will trade here until such time as news pushes it up or down. But the
biggest wake-up call today was in the pit, where option investors executed 9 $10,000+
trades with bullish or bearish theses. That is unusual for VHC.
 
What to Watch For: Today saw solid option action; just missing solid share action.
Meanwhile, at some point in the future, if KL's vision comes to pass, we will see heavy
buying and a true rally in the stock (above $6.65). Along the way, the metrics below will
help tell us whether such a rally is about to ensue.
 
1) VHC stays >= 50-day Moving Average ($6.25) throughout the day [yes]
2) Daily share volume > 500K for 3 straight days [no-- 0 so far]
3) Trading range flat to rising for 3 straight days [no-- 0 so far]
4) Net VWAP increase for every 2 out of 3 days > $0 [yes -- 2 of 3 so far]
5) VWAP > Mid-line of Bollinger Bands ($6.11) [yes]
 
Option Summary: I've omitted all Jun trades as they are likely to be closings. For
rollovers, I list the new position only. Lists (> $2000). FYI, the open interest for the Jun
series stands as follows, with the change from yesterday in parentheses.
 
Call 2: 450 (-91)
Call 3: 540 (-30)
Call 4: 1050 (-48)
Call 5: 1861 (-27)
Call 6: 2316 (-12)
Call 7: 3687 (+25)
Put 6: 1664 (+15)
Put 7: 134 (0)
Put 8: 26 (0)
 
So I expect a lot of Jun ITM call closings or rollings the rest of this week.
 
Most Active Series
 
Jun Call 2's (101), Call 4's (182), Call 5's (393)
Jul Call 5's (294), Call 8's (150)
Sep Call 3's (100), Call 5's (126), Call 10's (133)
Dec Call 4's (100) 
Jan Call 10's (368), Put 5's (351)
 
Top Bullish Trades
 
1) 100 Jul Call 5's bought for $1.60 ($16,000) 
2) 101 Jul Call 5's bought for $1.50 ($15,150) 
3) 50 Dec Call 4's bought for $2.87 ($14,350)
4) 50 Dec Call 4's bought for $2.85 ($14,250)
 
5a) 30 Jan Call 2's bought for $4.34 ($13,020)
5b) 60 Jan Call 5's sold for $2.27 ($13,260) 
 
6) 88 Jan Call 10's bought for $0.77 - $0.80 ($6926) 
7) 50 Sep Call 7's bought for $0.95 ($4750)
8) 50 Dec Call 10's bought for $0.80 ($4000)
9) 21 Jul Call 5's bought for $1.55 ($3255) 
10) 150 Jul Call 8's bought for $0.20 ($3000) 
 
Top Bearish/Hedging Trades
 
11) 100 Sep Call 3's sold for $3.50 ($35,000)
12) 221 Jan Put 5's bought for $0.90 ($19,890) 
13) 130 Jan Put 5's bought for $0.86 - $0.88 ($11,310)
 
14a) 58 Sep Call 5's sold for $1.85 ($10,730)
14b) 58 Sep Call 10's bought for $0.30 ($1740)
 
15) 120 Jan Call 10's sold for $0.78 - $0.80 ($9552) 
 
16a) 50 Sep Call 5's sold for $1.91 ($9550)
16b) 50 Sep Call 10's bought for $0.32 ($1600)
 
17) 60 Jul Call 5's sold for $1.55 ($9300) 
18) 25 Jan Call 3's sold for $3.60 - $3.70 ($9106)
19) 110 Jan Call 10's sold for $0.80 ($8800) 
20) 30 Sep Put 7's bought for $1.50 ($4500)
21) 18 Sep Call 5's sold for $1.90 ($3420) 
 
Discussion: For some unknown reason, today's dollar action in the pits jumped up
significantly today on both the bullish and bearish side of the ledger. Five-figure dollar
trades were almost commonplace throughout the day. Yes, some of it was due to 
rollovers from June into later months but a good majority of it was to open new
positions. 
 
  Trades 14 and 16 were bearish call spreads where the Sep Call 5's were sold and
the Sep Call 10's were bought, for a net credit of $1.55 and $1.59 per set of contracts,
respectively. In these cases, the investor will make a profit when VHC < $6.55 or $6.59.
 
 Finally, the Spotlight Trade, #5, is a bullish 2:1 ratio spread similar to yesterday's 
where 30 Jan Call 2's were bought and 60 Jan Call 5's were sold for a total net credit
of $240. The payouts from the trade at OPEX VHC prices show how it works (ignoring
the $240 credit). 
 
PPS  Position Value 
 
$2        0
$3     +3000
$4     +6000
$5     +9000
$6     +6000
$7     +3000
$8       0
$9     -$3000
$10   -$6000
etc.
 
So this low cost ratio spread is a winner as long as VHC < $8.00 at Jan OPEX.
 
More fun tomorrow.
 
Cheers. 
 
 
 
 


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Msg # Subject Author Recs Date Posted
174663 Re: VHC Action // Slow Day for the PPS // The Real Action is in the Pit $.10 Superfecta 1 6/19/2019 9:13:47 PM


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