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Bullish flow detected in Banco Bradesco (NYSE: BBD), with 24,963 calls trading, or 21 times its recent average daily call volume.
Bearish activity detected in GlaxoSmithKline (NYSE: GSK), with 6656 puts trading, or seven times its recent average daily put volume.
Bullish flow detected in Nabors Industries (NYSE: NBR), with 7828 calls trading, or three times its recent average daily call volume.
Increasing volume also seen in Ford (NYSE: F), Microsoft (NASDAQ: MSFT), and Amazon.com (NASDAQ: AMZN).
Sentiment
Fear resurfaced Friday, as investors reacted to disappointing earnings and economic news, while anxiety levels rose following another day of unrest in the Arab world. Microsoft is down 4% and the biggest casualty in the Dow Jones Industrial Average after investors expressed disappointment with the software maker’s latest profit report. Ford and Amazon also fell on earnings news. Meanwhile, the day’s economic news showed GDP growing at a 3.2% annual rate in the fourth quarter. Economists were looking for an increase of 3.7%. Some investors also seem unsettled by the escalating anti-government protests in Cairo and other Egyptian cities. The latest reports indicate that the Internet has been shut down and a curfew has been imposed to thwart further protests. However, demonstrations have been spreading throughout the Arab world like wildfire after Tunisian citizens ousted their leader on January 14. Concern about instability in the region and the risk of contagion has the Dow Jones Industrial Average down 166 points in the final hour. The tech-heavy NASDAQ has been hit for a 62-point loss.
Bullish Flow
Symantec (NASDAQ: SYMC), which hit a high of $18.79 on earnings yesterday, is down 66 cents to $17.25. The stock has given up yesterday’s post-earnings gains and then some. Meanwhile, a noteworthy trade is a buyer of 16,000 SYMC Jan13 $17.5 Calls at $3.60 each. 16,690 now traded versus 51 contracts in open interest.
General Motors (NYSE: GM) is trading down 83 cents to $37.83 in sympathy with Ford, which lost 5.4% after reporting earnings of 30 cents per share, 18 cents below Street estimates. A noteworthy spread traded in GM late yesterday ahead of the news. One strategist bought 2,500 GM June 37 Calls and sold the June 33 – 42.5 strangle, 3,750 times. They paid $1.15 for the package and opened a new bullish position, which is essentially selling June 33 puts to buy the June 37 – 42.5 (two times by three times) call ratio spread. Meanwhile, GM Feb 40 Calls, which expire in three weeks and are now 5.7% out-of-the-money, were the most actives yesterday. 17,329 traded (61% on the offer), creating 13,926 in open interest, and now the largest position in GM options.
Bearish Flow
Waste Management (NYSE: WM) touched a new 52-week high early, but gave up the gains and is off 46 cents to $37.88. Morning option trades include a multi-exchange sweep of 5,134 WM April 31 Puts at 20 cents each when the market was 10 to 20 cents. 5,193 traded vs. 2,157 in open interest. At about the same time, a separate sweep of 3,171 WM March 33 Puts traded at 15 cents when the market was 5 to 15 cents. 3,342 traded versus two in open interest. The action comes after a 7% rally in WM since Jan. 11. Implied volatility is up 18% to 19 heading into earnings, Feb 17 (before market opens).
Implied Volatility Mover
CBOE Volatility Index (VIX) has seized 3.34 points to 19.49 and is at its highest levels since early-December, as the flight-to-safety trade is suddenly popular again. The day’s options volume includes 9.5 million puts and 9.4 million calls. Meanwhile, gold hit a lot of $1,307 early, but has since rallied back to $1,340. Treasury bonds finished with gains and crude oil bubbled $3.69 higher, to $89.33. Fear is back.
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.
