Your daily options trading wrap up.

Sentiment

The Federal Reserve signaled no real changes in monetary policy, rates were left alone, and said that the QE2 bond buyback program would end. However, the outlook for 2011 growth was scaled back and officials retained their pledge to keep rates low for an “extended period”. A March Durable Goods report that was a better-than-expected 2.5%. Economists were expecting 1.8%. Amazon.com (NASDAQ: AMZN), Corning (NYSE: GLW), and Dow component Boeing (NYSE: BA) seeing post-earnings gains today. The Dow Jones Industrial Average and NASDAQ jumped after Chairman Bernanke’s press conference. The CBOE Volatility Index (CBOE: VIX) fell .47 to 15.15. Trading in the options market is running about the norm, with 8.3 million calls and 6.2 million puts traded across the nine options exchanges so far.

Bullish Flow

LM Ericsson (NASDAQ: ERIC) is up $1.62 to $14.76 and ERIC calls are seeing active trading today after the company reported earnings that topped analyst estimates. 12,500 ERIC July 15 Calls have changed hands. Most of the action in small lots. The top trade is a 388-lot at the 55-cent asking price. It was part of a multi-exchange sweep of 697 contracts. Of the total volume, 51% has traded at the ask. While some investors are possibly opening new positions, others might be initiating closing trades. Open interest in the Jul 15 call is 20,015 contracts and the largest position in the Swedish telecomm. The contract is now 1.6% out-of-the-money with a delta of .46.

Baker Hughes (NYSE: BHI) is up $3.31 to $77.37 and touching new 52-week highs today after the oil driller reported earnings of 87 cents per share, which was 9 cents better-than-expected. In options action, a noteworthy spread traded this morning after an investor sold 14,000 BHI July 65 Calls at $12.25 each and bought 20,000 BHI July 75 Calls at $5.50. It might exit a position opened in early-January when the same spread saw opening action. Shares were at $55.60 at the time.

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Bearish Flow

Ecolabs (NYSE: ECL) adds 16 cents to $51.89 and the ECL May 45 – 50 Put Spread is sold at 20 cents, 19,000 times. It likely closes a position opened last week when the same spread traded 19,000 times at 75 cents. The company reported earnings yesterday and the stock showed little reaction to the news but is up 1.4% since the original trade was initiated. Falling implied volatility and slippage have also taken a toll on the put spread. Ouch.

Implied Volatility Mover

The beat-down in Longtop Financial (NYSE: LFT) continues. Shares sank 12.9% yesterday and are down another 14.2% to $19.08 today. The catalyst for yesterday’s decline was a cautionary research note from Citron Research. However, the recent decline dates back to the beginning of the month. Shares are down 40% month-to-date. LFT options remain heavily traded as well, with 21,000 calls and 25,000 puts on the tape so far today. The action is scattered in reaction to the big move in the stock. LFT May 20 Puts and Calls are the most actives. Meanwhile, implied volatility is up 22% to 128, a new record for the Hong Kong-based financial software developer.

Options Flow

Bullish flow detected in Tellabs (NASDAQ: TLAB), with 9678 calls trading, or nine times the recent average daily call volume.

Bearish activity detected in Arcelor Mittal (NYSE: MT), with 10,906 puts trading, or seven times its recent average daily put volume.

Bullish flow detected in McClatchy (NYSE: MNI), with 5095 calls trading, or 283 times its recent average daily call volume.

Increasing volume is also being seen in Broadcom (NASDAQ: BRCM), JDS Uniphase (NASDAQ: JDSU), and iShares Silver Fund (NYSE: SLV).

This article is by Frederic Ruffy, Senior Options Strategist at Whatstrading.com.