Your daily options trading wrap up.

Sentiment

Stock market averages are under water, with falling crude oil and earnings news weighing down the Dow Jones Industrial Average. Disney (NYSE: DIS) lost 5.8% and is the biggest loser in the Dow while Exxon Mobile (NYSE: XOM) and Chevron (NYSE: CVX) are also dragging down the industrial average after crude oil slipped for a loss of more than $5 per barrel. Crude is at $98.76 on weekly inventory data and after the buck made a decisive move against its European counter-part. EUR/USD is off 1.5% and the dollar index has rebounded .9% to 75.3. Metals are also lower on dollar strength. Gold lost $13.40 to $1,503.5 an ounce and silver gave up $3.16 to $35.33. The Dow Jones Industrial Average is down 160 points and the NASDAQ gave up 33.7. CBOE Volatility Index (CBOE: VIX) added 1.38 to 17.29. Trading in the options market is defensive, with 7.6 million calls and 6.9 million puts traded across the nine exchanges thus far.

Bullish Flow

Level 3 Communications (NASDAQ: LVLT) shares notch a new 52-week high of $1.93 today. The stock is up a dime to $1.89 and in the midst of a four-day 19% run higher. The stock’s upward trajectory has caught the attention of players in the options market with 9,130 calls and 900 puts traded in the Broomfield, Colo.-based communication services company. LVLT January 2013 2 Calls are the most active with 1,570 traded (93% on the Ask). Jun 1.5, Jun 2, Sep 1.5, and Sep 2 calls are seeing similar action. Shares are up today after HBO selected the company to deliver network services for the HBO GO Mobile app.

SPDR Technology ETF (NYSE: XLK) is off a nickel to $26.78. Today’s options volume of 52,000 calls and 200 puts is three times the average daily. The volume is heavily concentrated in XLK May 27 Calls with nearly 47,000 contracts traded. The strike is .8% out-of-the-money and expires at the end of next week. It has open interest of 19,723 and a delta of .37. Investors appear to be paying 15 and 16 cents per contract to open positions, perhaps looking for Cisco’s (NASDAQ: CSCO) earnings to lift the tech sector in the short-term. The networking giant is slated to release earnings after the closing bell today.

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

Bearish Flow

SPDR Oil Exploration and Production Fund (NYSE: XOP), which holds shares of major oil companies like Chevron, Conoco (NYSE: COP) and Exxon, is down $2.56 to $57.92 and puts on the ETF are seeing interest for a second day. Shares are under pressure following an impressive slide in oil prices today. Crude is down $5.11 to $98.98 per barrel on bearish weekly inventory data and a rebound in the buck. Yesterday, some investors were buying XOP Dec 56 Puts. Today, the focus has shifted to the XOP Sep 47 Puts with 22,130 traded and 100% at the Ask. Also of note today: a XOP Dec 59 – 62 Strangle, bought-to-open at $9.90 per contract, 8500 times. Implied volatility in the ETF has jumped 15% to 32.

Implied Volatility Mover

45,000 calls and 25,000 puts traded in Macy’s (NYSE: M) in morning trading Wednesday. Shares are up $2.33 to $28.66 after the retailer reported quarterly earnings of 30 cents per share, which was 11 cents better than Street estimates. Macy’s also raised full year guidance and announced plans to increase its dividend. Shares are up and the top options trade is an M Jun 23 – 37 Strangle, apparently bought at $1.87. It was tied to 670,000 shares and likely closes a position opened last week when the same strangle was sold at 79 cents, 10,000 times. While the strategist is taking a loss on the strangle, they’re likely banking a larger profit on the stock position after today’s post earnings rally in Macy’s shares. Implied volatility is down 6% to 34.

Option Flow

Bullish flow detected in Intercontinental Exchange (NYSE:ICE), with 3184 calls trading, or three times its recent average daily call volume.

Bearish activity detected in Silver Standard Resources (NASDAQ: SSRI), with 7958 puts trading, or four times its recent average daily put volume.

Bearish activity detected in iShares MSCI Australia Index (NYSE: EWA), with 8114 puts trading, or four times its recent average daily put volume.

Increasing volume is also being seen in Cisco, Yahoo (NASDAQ: YHOO), and Macy’s.

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.