Your daily options trading wrap up.
Sentiment
Death of Osama Bin Laden sent market up initially while the ISM Index of manufacturing activity printed at 60.4 in April, better than the 59.7 that economists had expected. A report on construction spending showed a 1.4% rise, compared with expected no change. Yet, market action turned mixed midday. Action in the commodities market mixed as well. While gold gained $1.90 to $1,558.3, crude slipped .49 to $113.44. Microsoft (NASDAQ: MSFT), Exxon (NYSE: XOM), and DuPont (NYSE: DD) are among the biggest losers in the Dow Jones Industrial Average. The Dow is down 5 points and 69 points from session highs. With thirty minutes left to trade, the NASDAQ is off 5.3 points. The CBOE Volatility Index (CBOE: VIX) gained 1.09 to 15.84. Volume in the options market is running about the usual, with 7.7 million calls and 6.2 million puts traded so far.
Bullish Flow
The top equity options trades so far today are in AT&T (NYSE: T) after an investor apparently sold the T May 30 – Jun 33 Call Spread at $1.40, 19,200 times. AT&T shares are up 12 cents to $31.24 and have performed well lately, up 14.3% since mid-March. Today’s spread trader might be exiting the position in in-the-money May calls, which expire in 18 days, to open a new one in the out-of-the-money June call options. AT&T reported earnings on April 20. Results were in-line and shares showed little reaction to the news.
Steve Smith writes for Whatstrading.com today: Yahoo (NASDAQ: YHOO) shares have popped 2.5% to a new 52-week high of $18.15 and have gained some 11% in the past week. This morning some notable prints on the call side as the YHOO June 19 Calls see a 10,000 contract block trade at 51 cents, on the offer, in what looks like an opening purchase. The YHOO July 20 Calls trade 7,600 (now total of 10,450) at the 36 cent asking price. Greenlight Capital disclosed a stake in Yahoo and the hedge fund said it was particularly interested in Yahoo’s China unit.
Bearish Flow
Tenet Healthcare (NYSE: THC) shares are down and implied volatility is up, even after Community Healthcare (NYSE: CYH) made a revised $7.25 per share all-cash bid for the company. THC is down 30 cents to $6.63 and THC May 6 Puts have traded 13,000 contracts. 98% traded at the ask and implied volatility in THC options is up 36% to 42, as investors seem skeptical about the potential for a deal between the two managed care companies.
Implied Volatility Mover
Las Vegas Sands (NYSE: LVS) calls are active and implied volatility is moving up ahead of earnings. 60,000 calls and 21,000 puts traded in the name so far. Shares are up 57 cents to $47.58 and LVS May 50 Calls are the most actives. 6,800 traded. The contract is 5.1% out-of-the-money and expires in 18 days. The LVS May Weekly 48 and 50 Calls are the next most actives. Looks like some investors are taking positions in OTM short-term calls ahead of the results. The top trades of the day are in the LVS June 50 – 55 Call Spread, which was apparently bought at 74 cents, 732 times. Overall, the flow seems to reflect bullish sentiment and implied volatility is moving up 7.5% to 48 ahead of the results, due tomorrow afternoon.
Options Flow
Bearish activity detected in SPDR S&P MIDCAP 400 (NYSE: MDY), with 11,081 puts trading, or three times its recent average daily put volume.
Bullish flow detected in Radian Group (NYSE: RDN), with 5198 calls trading, or three times its recent average daily call volume.
Bullish flow detected in Boston Scientific (NYSE: BSX), with 12,140 calls trading, or three times its recent average daily call volume.
Increasing volume is also being seen in Cephalon (NASDAQ: CEPH), Sirius Satellite (NASDAQ: SIRI), and Williams Companies (NYSE: WMB).
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.
