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February 20, 2013  Wed 3:47 AM CT

BX: SEE CHART GET CHAIN FIND STRATEGIES
Private-equity firm Blackstone saw enormous call action after climbing to a five-year high yesterday.

optionMONSTER systems show that 115,000 January 2015 30 calls were bought in two blocks of 53,040 for $0.42 and $0.43, far above the strike's previous open interest of just 948 contracts. Less than a minute earllier, a block of 13,600 January 2014 15 calls was sold for $4.45 in volume below the open interest of more than 48,000.

This appears to be a roll, with the trader selling the deep in-the-money 15 calls and using the proceeds to buy a much larger position in the farther-out 30 long calls. (See our Education section)

BX closed yesterday down 0.83 percent to $19.15 after peaking at $19.69 in the morning, its highest level since May 2008. Shares have been running up from support at $11.13 reached last May.

Total option volume in BX topped 139,000 contracts, twice its daily average in the last month.
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Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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