Thursday, August 28, 2008

More Aflac Options Movement

Hmm it seems that call options are going fast and furious today in AFL. It looks like 12168 contracts have already traded in the September 60 and 65 which is just about double the amount of open interest in all of the September contracts. There is even 1066 contracts moving in the October 60 as well. More commentary from Interactive Brokers Options report (they are blaming the action on a funny buyback by Aflac to the tune of $825 million:)

AFL – Aflac Inc. – There is considerable interest in options contracts on Aflac – the supplemental life and health insurance provider. Current existing open interest of 81,099 lots compares to volume seen today of 11,000 contracts mainly on the call side. With shares just 1% firmer at $56.79 we’re observing interest in the September contract at the 60 and 65 strike prices, where activity appears to have been initiated by buyers today. Two days ago the company announced an unusual method of repurchasing its own shares when it announced that it would pay Goldman Sachs $825 million using internal capital to fund purchases, to deliver three tranches of Alfac shares in December, January and February according to one version of the story. The story is possibly putting a floor under the share price at Afflac or could be order-flow from the investment bank as it seeks to slowly buy stock.

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