Your daily options trading wrap up.
Sentiment
The Dow Jones Industrial Average lost almost 250 points this morning after S&P cut US’ credit rating, concerns about a rate hike in China, the European Debt Crisis and an uninspiring profit report from Citigroup (NYSE: C). But stock market averages have moved well off session lows with the Dow down 162 points and the tech-heavy NASDAQ down 38. The CBOE Volatility Index (CBOE: VIX) rallied up to a morning high of 19.07 and was recently up 1.98 to 17.30. Trading in the options market is active, with 8 million calls and 7.3 million puts traded.
Bullish Flow
Akamai (NASDAQ: AKAM) with relative strength and increasing call volume. Shares are up $1.42 to $39.51 and 25,000 calls traded, which is four times the norm and three times the days put volume. AKAM May 45 Calls are the most actives with 4,500 traded (54% on the Ask). May 40 and 41 calls are busy as well. No news on the stock. The activity hints at possible chatter or is possibly a play on earnings, due April 27 (after market).
Las Vegas Sands (NYSE: LVS) loses a nickel to $44.08 and one investor pays 63 cents for the LVS May 47 – 50 Call Spread, 30,000 times in midday trading. It might roll a position down in strikes, as open interest in the May 50 calls is 36,851 and the second largest position in the name. The contract saw interest on April 7 as well, when nearly 20,000 traded and investors were apparently rolling out of April 45 calls. The bullish trading might be a play on earnings, due early-May.
Bearish Flow
Cisco Systems (NASDAQ: CSCO) slides to a new 52-week low and is down 36 cents to $16.67. In options action, one investor bought a 20,000-contract block of CSCO June 15 Puts at 21 cents each. Hearing it was tied to stock at $16.63 (on 17 delta) and is possibly closing as open interest is 27,270. Total volume in Cisco is heavy, with 55,000 calls and 60,000 puts changed hands so far.
Implied Volatility Mover
CBOE Volatility Index (CBOE: VIX) has sprung back to life after S&P offered investors a Monday morning surprise and revised its US credit rating to Negative. The news came thirty minutes before the opening bell on Wall Street and stock index futures, which had already fallen into the red in pre-market action, sold off sharply. The table was then set for increased volatility at the open. VIX is up 3.34 points to 18.66 and VIX May 40 Calls on the volatility index are seeing some early action. 2,607 traded. The Apr 19s, which expire Wednesday, have traded almost 2000 contracts.
Options Flow
Bearish activity detected in Quanta Services (NYSE: PWR), with 4721 puts trading, or 10 times its recent average daily put volume.
Bullish flow detected in Celgene (NASDAQ: CELG), with 14,540 calls trading, or four times its recent average daily call volume.
Bullish flow detected in Focus Media (NASDAQ: FMCN), with 8000 calls trading, or four times its recent average daily call volume.
Increasing volume is also being seen in Johnson & Johnson (NYSE: JNJ), Advanced Micro Devices (NYSE: AMD), and Sara Lee (NYSE: SLE).
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.
