Your daily options trading wrap up.

Sentiment

Stock market averages are holding modest gains late-Wednesday. The economic calendar remains light and, besides a report from Bed, Bath and Beyond (NASDAQ: BBBY) after the close of trading today, there are no earnings of real market significance until Dow component Alcoa (NYSE: AA) reports after the closing bell Monday. Meanwhile, action in the commodities market continues to get some attention on Wall Street after gold moved to new record levels near $1,460 and crude oil bubbled beyond $109 a barrel. At the same time, Cisco (NASDAQ: CSCO) is leading the Dow Jones Industrial Average to higher ground after CEO John Chambers late Tuesday vowed to shake things up at the networking giant. Cisco shares are up 5.4% and the industrial average has added 36 points. The NASDAQ Composite was flat at midday, but is now up 8 points heading into the final thirty minutes. The CBOE Volatility Index (CBOE: VIX) lost .68 to 16.57. Options action is picking up a bit, with 7.7 million calls and 5.8 million puts traded so far.

Bullish Flow

Cisco Systems (NASDAQ: CSCO) is up 3.8 percents to $17.88 and the Dow’s best gainer, the day after John Chambers suggested that the networking giant might change operations and possibly look for ways to cut costs. RBC is out with a note today saying that Cisco might narrow its focus to key markets and divest some businesses. Shares, which hit a 52-week low of $16.97 on March 17, are breaking out of a bearish funk and 260,000 call options have traded in Cisco so far, which is seven times the typical volume and compares to 64,000 puts. The top trade is CSCO May – June 20 Call Spread bought at 8 cents, 7,300 times, and possibly a time spread or rolling of a bullish position out an additional month. Another investor sold the CSCO Jan 15 – 20 Strangle at $1.46, 5000 times and is possibly looking for shares to remain in range through Jan 2012. CSCO April 18 Calls, which expire at the end of next week, are the most actives with 46,655 traded.

J.C. Penney (NYSE: JCP) trades down 27 cents to $36.48 and morning trades in the retailer include a multi-exchange sweep of JCP April 39 Calls at 36 cents when the market was 31 to 35 cents. Another 839 traded at 40 cents when the market was 36 to 37 cents. 5,090 now traded versus 1214 in open interest. Looks like opening call buying in the April 40s as well. March same store sales numbers are due tomorrow.

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Bearish Flow

20,000 puts and 5,175 calls traded in The Gap (NYSE: GPS). The volume is eight times the average daily and is possibly in anticipation of monthly same store sales numbers tomorrow. The top trade is a 4100-contract block of GPS Sep 22 Puts at $1.40 on International Securities Exchange when the market was $1.33 to $1.41. It’s possibly a firm buyer opening a new position and looks tied to 152,000 shares at $23.12 per share. 6,220 contracts now traded. A block of 2,374 GPS April 23 Puts traded at 48 cents this morning on ISE and is an opening customer buyer, according to ISEE data. Volume is now approaching 9,000 contracts. April 22 puts and May 24 calls are seeing interest as well. Shares are flat at $23.10, but implied volatility is up 22% to 33.

Implied Volatility Mover

Skywork Solutions (NASDAQ: SWKS) has come under fire today and is trading down $2.91 to $27.97. Shares were downgraded at Charter Equity today. Firm says the company’s content in iPhone 5 (August 2011) could be less than half of what it gets in iPhone 4. Skywork shares have been southbound throughout the morning session and are probing lows of the day. 14,000 puts and 6,320 calls traded in the name, or more than double the average daily. The top trade is a well-timed opening buyer of 2000 SWKS May 30 Puts, which traded at $2.30 on ISE. The market is now $3.10 to $3.30 and 4,140 traded. May 25, 26, 27 and 29 puts are among the most actives as well. Implied volatility is up 13% to 47.

Option Flow

Bullish flow detected in Tyson Foods (NYSE: TSN), with 12,201 calls trading, or seven times its recent average daily call volume.

Bullish flow detected in Eldorado Gold (NYSE: EGO), with 7334 calls trading, or three times its recent average daily call volume.

Bullish flow detected in Urban Outfitters (NASDAQ: URBN) with 9846 calls trading, or six times its recent average daily call volume.

Increasing volume is also being seen in Limited Brands (NYSE: LTD), United Continental (NASDAQ: UAL), and Goldcorp (NYSE: GG).

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.