Your daily options trading wrap up.
Sentiment
Stocks are trading mixed on the last day of trading for the first quarter 2011. Economic data was in focus early after the Labor Department said that weekly jobless claims fell by 6,000 in the final full week of March, which was less than the 11,000 drop that economists had expected. The weak reading did grab a bit more attention than usual, because it comes ahead of key monthly jobs data tomorrow. A separate report showed the March Chicago PMI gauge of manufacturing activity falling to 70.6 from 71.2, and a bit better than the 69.5 that was expected. However, February factory orders fell by .1% and worse than the .4% that was anticipated. Meanwhile, some market watchers are keeping an eye on crude oil, where prices are bubbling beyond $106 per barrel, highest levels since 2008. End of quarter window dressing is a factor as well. Still, there isn’t much volume or volatility. The Dow Jones Industrial Average has traded in a narrow 49-point range and is down 7 points heading into the final half hour. The tech-heavy NASDAQ is up 5.2 points. The CBOE Volatility Index (CBOE: VIX) slipped .15 to 17.56. Trading volume in the options market is on the light side, with 6.2 million calls and 5 million puts traded so far.
Bullish Flow
Call options in Sohu.com (NASDAQ: SOHU) are busy for a second time in three days. Shares are up $3.13 to $90.26 and SOHU April 95 Calls are the most active with 1,700 traded. Possibly seeing some closing trades, as 39% traded on the bid/40% on the ask and open interest is 1,727. April 90 and May 95 calls are the next most actives. Total volume is 8,180 calls/1,925 puts, three times the average daily. SOHU April 80, April 95 and Jun 95 calls saw interest Tuesday. It’s not clear what’s driving the action in the Chinese Internet company this week. Shares are up nearly 9% since Friday.
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Bearish Flow
Dell (NASDAQ: DELL) is down 11 cents to $14.53 and a bearish three-way spread has traded multiple times, with one or more investors selling DELL May 16 Calls to buy the DELL May 12 – 14 Put Spread. For example, it traded at 24 cents, 300 times on the International Securities Exchange about thirty minutes ago. Volume in all three contracts is now more than 5000.
Research In Motion (NASDAQ: RIMM) loses 78 cents to $56.25 and morning trades include a RIMM June 45 – 55 Put Spread, bought at $2.89, 5,900 times. 6,800 traded through mid-morning and could be closing or rolling, as open interest is sufficient to cover in both contracts. Or, it might be a straight bearish bet after shares of the Blackberry-maker fell 11.2% on disappointing earnings last Friday.
Implied Volatility Mover
Moody’s (NYSE: MCO) came under fire and put volume picked up in the name midday after the EU said it might ban US-based credit rating agencies. Shares, which hit a 52-week high of $34.74 Wednesday, fell to a low of $32.99 and are now off 53 cents to $33.92. Investors are scrambling to buy out-of-the-money puts. MCO April 33 Puts are the most actives with 3,700 traded. April 32 and May 30s are busy as well. 14,000 puts and 2,700 calls traded in Moody’s. Implied volatility has moved up 7.5% to 29.
Options Flow
Bullish flow detected in Deer Consumer Products (NASDAQ: DEER), with 5290 calls trading, or four times its recent average daily call volume.
Bullish flow detected in Silicon Graphics (NASDAQ: SGI), with 5332 calls trading, or four times its recent average daily call volume.
Bullish flow detected in Macys (NYSE: M), with 34,875 calls trading, or five times its recent average daily call volume.
Increasing volume is also being seen in Mosaic (NYSE: MOS), Illinois Tool Works (NYSE: ITW), and Coca-Cola (NYSE: KO).
Frederic Ruffy is the Senior Options Strategist at Whatstrading.com, a site dedicated to helping traders make sense of the complex and fragmented nature of listed options trading.
