Running a Marathon

Unusual activity in the oil refiner during earnings week

There are about 4,000 publicly traded companies in the United States (this does not include stocks that are traded over the counter). So, what are the odds that we would feature ONE stock in unusual activity three times in a week? Slim! I would do the math, but it's late on Saturday night, the Cubs are down in the fourth game of the World Series, and I don't feel up to it. So, we will stick with slim.

So what happened this week with Marathon Petroleum Corp.?

It started on 10/26 with Split Month Combos Go Up in MPC.

Shares of Marathon Petroleum Corp (MPC) are up .74 to 44.43 today. On that day MPC was near the middle of the 52-week range.

• Paper traded 10000 MPC Dec 45 calls over Jan2017 38.75 puts for 1.75 and 1.15. 
• ADV is 4500. 
• The OI is 42 and 636 contracts.

The volume went 4 blocks on the PHLX marked spread.  It appears the trader is buying a call and selling more long term puts to help pay for the calls.  No stock near this option volume printed so the trade is a standalone long delta or a hedge against short stock.  The latter is unlikely given the structure and with earnings tomorrow.

On that day:

• IV 30 is trading for 34%. 
• HV10 is trading for 17%. 
• IV 30 is above the HV 10.

It continued on 10/27 with MPC Call Spreads Trade.

Shares of Marathon Petroleum Corp (MPC) are down 1.06 to 43.20 today. MPC is in near the middle of the 52 week range.

• Paper traded 50000 Jan 50/60 Apr 50/60 call spreads for .40 and 1.10.  
• ADV is 4830. 
• The OI is 90k on the Jan call spreads and less than 500 contracts for the Apr call spreads. 

The volume went up in 4 blocks on the PHLX marked spread.   As priced the customer looks like they bought to close the Jan and sold to open the Apr.  81k+ spreads traded total.  A block of 20000 Apr 45s traded marked buy write that does not appear to be tied with the spreads but all the activity is consistent with large buy writers.

On that day:

• IV 30 is trading for 36%. 
• HV10 is trading for 16%. 
• IV 30 is above the HV 10.

More action from 10/27 in the end of day most active stock options

Then, for the third time in as many days, with MPC Calls & Stock Print.

Shares of Marathon Petroleum Corp (MPC) are down .55 to 42.27 today. MPC is in near the middle of the 52 week range.

• Paper traded 20000 MPC Dec 45 calls for 1.15.  
• ADV is 10559 
• The OI is 10520.

The volume went up in 1 block on the PHLX marked buy write.   A block of stock with 627k shares went up roughly delta neutral.  The trader is looking for a big move in MPC in the short term.  This is the 3^rd day in a row for MPC hitting UA.  Threre is lots of call and stock activity.

On that day:

• IV 30 is trading for 36%. 
• HV10 is trading for 25%. 
• IV 30 is above the HV 10.

And then again with the most active equity options on 10/28:

What gives? On Thursday, MPC reported third-quarter profit of $145 million.

On a per-share basis, the company said it had profit of 27 cents. Earnings, adjusted for asset impairment costs, were 58 cents per share.

The results did not meet Wall Street expectations. The average estimate of 10 analysts surveyed by Zacks Investment Research was for earnings of 78 cents per share.

The refiner posted revenue of $16.46 billion in the period, which also fell short of Street forecasts. Five analysts surveyed by Zacks expected $16.88 billion.

Marathon Petroleum shares have decreased 15 percent since the beginning of the year, while the Standard & Poor's 500 index has climbed almost 5 percent. The stock has dropped 9 percent in the last 12 months.

Watch this space to see if the unusual activity continues for MPC.

 

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