Cautious Mood in Midday Trading

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Your intraday options trading update.

The market is coming back a little from its early 150-point or so sell off, with the Dow now down about 122. But there’s a growing mood that the economy isn’t looking robust.

“There’s a concern with the economic recovery, a thinking of ‘What is taking place here?’” said Roy Briggs, options strategist with Stutland Volatility Group in Chicago.

Last week commodities were traded down with such equity-market substitutes as the iShares Silver ETF (NYSE: SLV) and the SPDR Gold Trust (NYSE: GLD) working on weak rallies, he noted.

“Today it’s the news in Hewlett-Packard (NYSE: HPQ),” said Briggs referring to the technology firm lowering its guidance for the year. HPQ reported solid second quarter results but investors slammed the stock after the leaked release of a note from CEO Leo Apotheker directing executives to cut back on hiring and spending plans. HPQ is down about 7.5% to 36.83.

Today analyst Richard Gardner of Citigroup (NYSE: C) said in a note to clients that “Consumer PC demand remains anemic in the US and Western Europe,” while HPQ has struggled in China.

The market today also is seeing mixed news by retailers with Wal-Mart (NYSE: WMT) reporting a 3% rise in quarterly profits, though its same store sales in the U.S. dropped 1.1%, the eighth-straight quarterly drop. WMT is down about 1.4% to 55.30.

Briggs said the market is becoming more cautious following “a two-week gradual decline. It’s not a rock falling out of the sky but traders are concerned over how things are turning out.”

High Options Volume by Strike

TOTAL SA (NYSE: TOT) leads options volume though it is going ex-dividend tomorrow with traders boosting volume in the TOT May 55 Call to 113,025 contracts. The strike is up .29 to 2.60. TOT is the huge global oil company.

United Technologies (NYSE: UTX) is grabbing option volume in its UTX May 85 Calls and May 80 Calls. The 85s trade nearly 93,000 contracts, falling 1.65 to 2.25 as expiration looms this Friday. UTX is at 87.65 at lunch, down 1.24. CEO Chenevert said rising oil prices and supply interruptions in Japan could impact industrial giant. UTX is down 1.3% to 87.72.

Duke Energy (NYSE: DUK) is also going ex-dividend tomorrow though in a separate report it agreed to pay $30 million to settle a lawsuit brought by current and former employees. DUK May 18 Calls are busy, trading 87,000 contracts, up .17 to 1.40. The DUK Jul 18 Calls are trading 70,000 options, up .05 to 1.35. DUK is up .10 to 19.40.

Put strikes in the SPDR S&P 500 ETF (NYSE: SPY) are active with the SPY Aug 126 Put trading 80,000 options as it rises .10 to 2.70. The SPY May 132 Put trades 76,000 contracts, falling .10 to .64.

The iShares Russell 2000 Index ETF (NYSE: IWM) sees its IWM May 83 Put trade up .02 to 1.47 on nearly 84,000 contracts.

Major Stock Trading Volume Movers

Vitesse Semiconductor (NASDAQ: VTSS) trades 4.1 million shares and is down .44 to 4.04. CFO recently announced his retirement and integrated circuit maker reported lower second quarter revenues last week.

FairPoint Communications (NASDAQ: FRP) drops 5.72 to 10.35 on 1.4 million shares. Yesterday it reported flat first quarter revenues.

Atheros Communications (NASDAQ: ATHR) is down .33 to 44.46 on 3.2 million shares. San Jose, Calif.-based Atheros released a wi-fi chip today for audio visual uses.

Find more option analysis and trading ideas at Options Trading Strategies.

Burney Simpson is the managing editor of InvestorPlace options pages.


Article printed from InvestorPlace Media, https://investorplace.com/2011/05/cautious-mood-in-midday-trading-hpq-wmt-utx-tot/.

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