Your daily options trading wrap up.
Sentiment
Mixed numbers to digest. A report on GDP showed the economy growing at a 1.8% annual rate in the first quarter, better than expected, but filings for jobless benefits increased by 25,000 last week. Economists were expecting a decline of 14,000. Pending Homes Sales numbers showed an increase of 5.1% in March while economists were expecting a rise of 1.7%. Earnings news was equally mixed. Procter & Gamble (NYSE: PG) edged up and was one of 20 Dow stocks in positive territory in afternoon action after it reported an 11% increase in quarterly profits. Sprint (NYSE: S) and Pulte Homes (NYSE: PHM) traded higher after both companies lost less money than analysts feared. Baidu.com (NASDAQ: BIDU) and Akamai (NASDAQ: AKAM) down on disappointing news. Microsoft (NASDAQ: MSFT) reports after the close. The Dow Jones Industrial Average is up 51 points, but the tech-heavy NASDAQ is fractionally lower. The CBOE Volatility Index (CBOE: VIX) is down .81 to 14.54 and on pace to set a closing low not seen since mid-2007. Trading in the options market is running about the typical levels, with 8.4 million calls and 6.4 million puts traded so far.
Bullish Flow
Microsoft is seeing brisk trading ahead of earnings. Shares are up 28 cents to $26.66 and 426,000 options have traded in the software giant so far today. The volume consists of 291,000 calls and 135,000 puts. Investors are leaning on the bullish side of the trade ahead of the report. MSFT May 27 Calls are 1.2% OTM and have traded 61,000 contracts. The MSFT Weekly 27 Calls, which come off the board tomorrow, are the next most actives with 47,690 contracts have changed hands. Open interest is 9,581 and the option has a delta of .40. The Weekly and May 26 calls are seeing heavy trading as well. Analysts expect Microsoft to post a quarterly profit of 56 cents per share on $16.2 billion in revenues. Implied volatility in Microsoft options is up 3.5% to 25 ahead of the results.
The iShares Silver Trust ETF (NYSE: SLV) continues to do massive volume. SLV finishes up .26 to 47.26 as options traders come out for the SLV Apr 29 Weekly and SLV May 6 Weekly along with May and June expiring strikes.
Bullish pre-earnings action in Oclaro (NASDAQ: OCLR). Shares of the San Jose, Calif.-based optical component maker are up 4 cents to $11.80 and 6,750 calls traded in the name, 12 times the typical volume and 10 times the day’s put activity. The top trade is 743-contract lot of OCLR May 12.5 Calls at the 60-cent asking price. Another 613 traded there too. Both are opening buyers, according to ISEE data. 4,325 now traded. Jun 12.5 and Jul 17.5 calls are seeing interest as well. The company is due to release results after the closing bell. OCLR tumbled 18.6% on March 9 after peer Finisar posted disappointing earnings. It continued falling, losing another 24.6% through April 19, but is on a six-day 15.7 percent winning streak since that time.
Find more option analysis and trading ideas at Options Trading Strategies.
Bearish Flow
OfficeMax (NYSE: OMX) sees early options action. Shares are down $1.94 to $10.55 after the company reported earnings of 13 cents per share, 14 cents less than Street estimates. The top options trade is a 1335-contract block of OMX Aug 9 Puts at the 35-cent asking price. 5,546 vs. 1,144 in open interest. With 85% of the volume trading at the Ask, it appears that buyers are taking positions and bracing for further losses in OMX in the months ahead. OMX May 11 Calls, which have traded 1267 contracts (84% on the Ask), are possibly seeing opening buyers as well.
Implied Volatility Mover
Sprint shares hit a high of $5.10 this morning and are up 22 cents to $5.01 after the company reported a quarterly loss of 15 cents per share, which was not as bad as the 22-cent loss that was expected. Revenues topped expectations. Shares are up and one investor sold 29,000 S Aug 5.5 Calls at 24 cents per contract. It might be a giant overwrite on the strength. A block of 1.37 million shares traded at $4.96 within 20 minutes of the call write. S Aug 5.5 Calls are 9.8% out-of-the-money with a delta of .37. 30,980 now traded versus 35,266 in open interest. May 5 and 6 calls are seeing interest as well, with 15,640 and 5,310 traded, respectively, and more than 80% traded on the bid. Implied volatility is down 18% to 35.
Options Flow
Bullish flow detected in Cypress Semiconductor (NASDAQ: CY), with 10,358 calls trading, or five times the recent average daily call volume.
Bullish flow detected in MannKind (NASDAQ: MNKD), with 7862 calls trading, or six times the recent average daily call volume.
Bearish activity detected in Monster Worldwide (NYSE: MWW), with 6711 puts trading, or 10 times its recent average daily put volume.
Increasing volume is also being seen in Baidu.com, Akamai, and the SPDR Industrials ETF (NYSE: XLI).
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.
