by Frederic Ruffy | May 10, 2011 3:57 pm
Your daily options trading wrap up.
Action in the commodities market continues to get some attention. Crude oil added $1.23 to $103.78 in volatile trade ahead of tomorrow’s inventory numbers. Gold gained $14.3 to $1,517.50 an ounce and silver added $1.54 to $38.65. Heading into the final hour, the Dow Jones Industrial Average is up 83 points and near session highs. The tech-heavy NASDAQ gained 26.6. The CBOE Volatility Index (CBOE: VIX) slipped 1.18 to 15.98. Trading in options is brisk and being heavily influenced by ex-dividend trades. 12.2 million calls and 5.1 million puts traded so far.
In ex-dividend activity, Pfizer (NYSE: PFE), Lilly (NYSE: LLY), BP (NYSE: BP), Wal-Mart (NYSE: WMT), Costco (NASDAQ: COST), and duPont (NYSE: DD) are all very busy. Pfizer alone has traded 3.4 million calls. The volume will distort today’s put-to-call ratio.
Microsoft (NASDAQ: MSFT) shares hit a morning low of $25.25 on news the company is paying a hefty $8.5 billion for Internet phone service Skype. Yet, while shares are lower, sentiment in the options market seems decidedly bullish. 61,000 calls and 20,000 puts traded on the software giant so far. MSFT May 26 Calls, which are 1% out-of-the-money and expire in 10 days, are the most actives with 12,380 traded. With three quarters trading at the Ask, it looks like call buyers are driving the flow. Jun 27, Jul 29, and 25 calls are seeing active trading (predominantly at the Ask) as well. Meanwhile, the MSFT May 25 Put is the most actively traded put after 3,715 changed hands. Implied volatility in Microsoft options is up 2.5% to 19, compared to a YTD high and low of 17 and 36.
Call volume in Boeing (NYSE: BA) is approaching 500,000 due to ex-div trading. Shares are up 70 cents to $80.34 and more than 200,000 BA May 75 Calls have changed hands.
Find more option analysis and trading ideas at Options Trading Strategies.
Dell (NASDAQ: DELL) adds 19 cents to $16.38 and a DELL Jan 11 – 15 Put Spread bought this morning at 86 cents, 7500 times, was tied to 180,000 shares at $16.40. The spread might have been initiated as a hedge ahead of a May 17 (after market) earnings release.
Implied Volatility Mover
BioMimetic Therapeutics (NASDAQ: BMTI) is reeling today on concerns about FDA approval of the company’s Augment bone graft, which stimulates broken bones to grow back together. The FDA is expected to decide Thursday and post information on its web site today. Shares are down $4.73 to $8.66 on worries decision-makers might voice safety concerns and question the risk/benefits of the device. Meanwhile, options volume in BMTI is 15,000 calls and 17,000 puts. BMTI May 11 Puts, which are now 21.5% in-the-money, are the most actives with 4,950 traded; investor might be closing positions. Open interest is 5,564 and 94% of the volume traded on the bid. Volume seen in May 9 puts, Jun 11 puts, Jun 11 calls, May 10 calls and May 15 calls. Meanwhile, implied volatility is up 40% to 243, as investors now brace for next round of information from the FDA.
Bearish activity detected in Ebix (NASDAQ: EBIX), with 2781 puts trading, or four times its recent average daily put volume.
Bullish flow detected in News Corp. (NASDAQ: NWSA), with 5657 calls trading, or three times its recent average daily call volume.
Bullish flow detected in US Airways Group (NYSE: LCC), with 30,841 calls trading, or six times its recent average daily call volume.
Increasing volume is also being seen in American International Group (NYSE: AIG) Southwest Airlines (NYSE: LUV), and Xerox (NYSE: XRX).
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.
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