Your daily options trading wrap up.
Sentiment
Modest gains in quiet trading Tuesday. Better-than-expected earnings from Johnson & Johnson (NYSE: JNJ) shares are up 3.1% and one of 20 Dow stocks heading higher in the final hour. Meanwhile, the latest Housing Starts data surprised to the upside. According to the Commerce Department, builders broke ground at an annual rate of 549,000 in March, better than the 512,000 in February and ahead of expectations of 520,000. With an hour left to trade, the Dow is up 55 points and the tech-heavy NASDAQ gained 5. Overall options volume is in the light side, with 6.6 million calls and 5.2 million puts traded so far. (Note: no recap tomorrow, as I will be at the Chicago Board Options Exchange). The CBOE Volatility Index (CBOE: VIX) was down 1.13 to 15.83.
Bullish Flow
Blackboard (NASDAQ: BBBB) is up $12.74 to $49.90 on news it has hired Barclay’s to explore a possible buyout. Yesterday, 1,267 calls traded in the Washington, D.C.-based multimedia and graphics software company. Typical volume is 56 contracts. Monday’s action included a 1,000-contract block of BBBB May 40 Calls at 40 cents on the International Securities Exchange, which was an opening buyer, according to ISEE data. 1,281 May 40 calls traded total and open interest increased by 1,233 to 1,485, which is the largest position in BBBB. The contract is now bid at $9.70.
The top options trade in the first hour of Tuesday’s session is a block of Bank of America (NYSE: BAC) 28,000 BAC May 13 Calls at 17 cents per contract. It was sold as part of a May 13 – June 13 (2X1) call spread, in which the investor also bought 14,000 BAC June 13 Calls. Shares are extending a six-day losing streak and are down 13 cents to $12.29 Tuesday morning. Today’s spread trader might be rolling a position from the May 13s to one half the size in the June 13s.
Find more option analysis and trading ideas at Options Trading Strategies.
Bearish Flow
Steve Smith writes for Whatstrading.com today that: Ecolabs (NYSE: ECL), a St. Paul, Minn.-based food inspection and sanitation firm, shares are up 16 cents to $50.88 and sees notable activity as the ECL May 50/45 Put Spread traded 19,000 times at 75 cents in what looks like an opening purchase. This would create far and away the largest positions as no other strike, put or call, in any month has open interest greater than 500 contracts. This is potentially tied to stock and could be positioning ahead of the April 26 earnings report.
Implied Volatility Mover
Pre-earnings action in Hanesbrands (NYSE: HBI). Shares are up 54 cents to $28.88 and the focus is on the HBI May 30 Calls with 2,380 traded, including several lots this morning at the 70-cent asking price. Open interest is 676 and ISEE data confirm that investors are buying-to-open new positions. The contract is 3.9% out-of-the-money with a delta of .39. Earnings are due tomorrow morning. Implied volatility is up 26% to 39.
Options Flow
Bullish flow detected in Qihoo 360 Technology (NYSE: QIHU), with 5794 calls trading, or two times its recent average daily call volume.
Bearish activity detected in Tellabs (NASDAQ: TLAB), with 7066 puts trading, or seven times its recent average daily put volume.
Bearish activity detected in Citrix Systems (NASDAQ: CTXS), with 6348 puts trading, or three times its recent average daily put volume.
Increasing volume is also being seen in Intel (NASDAQ: INTC), GM (NYSE: GM) and Goldman Sachs (NYSE: GS).
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.
