Russia Stocks, Alcoa See Crazy Options Action After Sanctions

Yandex options traders are betting on a rebound

Apr 9, 2018 at 2:22 PM
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New U.S. sanctions against Russia are sinking the VanEck Vectors Russia ETF (RSX), along with several stocks with Russian ties, including internet issue and Uber partner Yandex NV (NASDAQ:YNDX). In addition, the sanctions froze the U.S. assets of Russian aluminum company Rusal, lifting shares of American aluminum producers like Alcoa Corp (NYSE:AA). Against this backdrop, RSX, YNDX, and AA stocks are seeing unusual options activity today.

RSX Put Volume Hits New High

Shares of the VanEck Vectors Russia exchange-traded fund (ETF) were last seen 10% lower at $20.14, set for their worst day since December 2014. Further, RSX is set to end beneath its 200-day moving average for only the second time since August. The fund is now on the short-sale restricted (SSR) list.

As such, RSX puts are flying off the shelves at 16 times the average intraday clip, with more than 44,000 exchanged. That's already surpassed the ETF's previous annual high of 25,772 puts traded on Jan. 18, and is more than four times the number of RSX calls exchanged.

The April 20 put is easily the most active, accounting for more than 15,000 contracts. Speculators buying the puts to open expect RSX shares to move south of $20 by the close on Friday, April 20, when the front-month options expire. The fund hasn't ended beneath that level since August.

Today's affinity for puts merely echoes the growing trend we've seen on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), where RSX sports a 10-day put/call volume ratio of 1.05. This ratio registers in the 66th percentile of its annual range, suggesting options buyers have been picking up RSX puts over calls at a faster-than-usual clip during the past two weeks.

YNDX Option Buyers Bet on a Bounce

Yandex shares are down 10.4% at $35.29 -- also set for their worst day since Dec. 8, 2014. The equity is set to close south of its 120-day trendline for only the second time in over a year, and is also on the SSR list today.

Unlike RSX, options traders today are targeting YNDX calls. In fact, call volume is running at 23 times the average intraday clip, with 53,000 exchanged thus far. That's already above the security's Feb. 2 annual high of more than 31,200 calls traded, and is about 10 times the number of YNDX puts exchanged.

The May 36 call is most popular, accounting for more than 21,000 contracts. According to Trade-Alert, much of the activity is of the buy-to-open variety. By purchasing the calls to open, the buyers expect Yandex stock to rebound north of $36 before May options expire.

Still, YNDX is no stranger to call buyers. On the ISE, CBOE, and PHLX, the equity's 10-day call/put volume ratio rests at a lofty 26.05 -- in the 80th percentile of its annual range. In other words, even before today, options buyers have preferred YNDX calls over puts by a huge margin.

Alcoa Eyes Best Day in a Year

Finally, Alcoa is reaping the benefits of the Russian aluminum sanctions, with the shares last seen 7.2% higher at $51.48. The equity is now pacing for its first close above its 60-day moving average since early February, and its best day since April 2017. Prior to today, AA shares were bouncing along support in the $44 region.

Alcoa options are crossing the tape at three times the average afternoon pace, though calls outnumber puts roughly 3-to-1. Speculators are seemingly placing short-term bullish bets, with most of the action taking place at the weekly 4/13 50-strike call. By purchasing the calls to open, the buyers expect AA stock to extend its trek above $50 through the end of the week.

Again, though, it's more of the same for AA options buyers, which have preferred calls over puts by a bigger-than-usual margin in the past two weeks. The aluminum stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 7.34 is higher than 93% of all other readings from the past 12 months.


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