Put Trading in American International Group (AIG) and a Peek at the SPDR S&P 500 Index (SPY)

Jud Pyle, CFA Chief Investment Strategist
www.ONN.tv

Part one of Thursday’s "Sidewinders: Option Volume vs. Open Interest" series, filmed on the trading floor of the Chicago Board Options Exchange (CBOE), looks at the SPDR S&P 500 Index (SPY) and discusses put volume on American International Group (AIG).

American International Group(AIG)
AIG has been sliding steadily lower since its reverse stock split. The August 5 puts are active, with nearly 11,000 trading at $2.80. The July 10 straddle is trading at $2.93, or 29.3% of strike with only a week to go, indicating extreme volatility in the stock.

American International Group News: Multiple stories today in AIG, although the main culprit behind the stock’s 20% drop seems to be sell-side analysts suggesting there is little-to-no value in AIG shares given the government intervention. There is also news that AIG may have rekindled talks with MetLife regarding the sale of its American Life Insurance Company – the divesture could help AIG raise as much as $15 billion.

SPDR S&P 500 Index (SPY)
This ETF is basically unchanged in the first hour of trading after moving higher out of the gate. It is a tough trading market for the bulls right now. The July 88 straddle is trading at $3.12, in 18 cents from Wednesday’s close as time decay speeds up towards next Friday’s options expiration.

For more breaking developments in the options market, stay tuned in to www.ONN.tv. Thanks for watching!