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Bullish flow detected in Titanium Metals (NYSE: TIE), with 5418 calls trading, or two times its recent average daily call volume.

Bearish activity detected in Power One (NASDAQ: PWER), with 10117 puts trading, or seven times its recent average daily put volume.

Bullish flow detected in Exelixis (NASDAQ: EXEL), with 2733 calls trading, or nine times its recent average daily call volume.

Increasing volume is also being seen in Corning (NYSE: GLW), Microsoft (NASDAQ: MSFT), and Halliburton (NYSE: HAL).

Sentiment

Major averages are holding modest gains on better-than-expected housing data and benign comments from Federal Reserve officials. Data released Wednesday morning showed New Home Sales improving to an annual rate of 329,000 in December. Earnings remain in focus as well. Boeing (NYSE: BA) lost 2.9% and is the biggest loser in the Dow Jones Industrial Average after its results fell short of expectations. Yahoo (NASDAQ: YHOO) and Computer Associates (NASDAQ: CA) are also trading lower on earnings. Yet, both the Dow Jones Industrial Average and the NASDAQ are heading to session highs in the final hour after Federal Reserve officials concluded their latest policy meeting. As expected, the FOMC voted to leave rates unchanged and also pledged to keep rates low for an extended period of time. Eighteen of the Dow 30 are above water and the industrial average has added 28 points. The tech-heavy NASDAQ added 24. The CBOE Volatility Index (VIX) lost .91 to 16.68. Options volume includes 7.5 million calls and 6.2 million puts.

Bullish Flow

KB Homes (NYSE: KBH) adds 67 cents to $15.92 on a good day for the builders after data showed New Home Sales up to an annual rate of 329,000 in December, from 280,000 the month before and better than the 300,000 that economists had predicted. One investor seized the strength to sell 9,500 KBH Mar 16 Calls at 92 cents each. 11,104 now traded versus 112 in open interest. A shareholder might have an initiated the trade as part of a buy-write/covered call. Or, it might be a straight bet that KBH won’t capture $16 by the March expiration. 16,000 calls and 3,430 puts now traded in the builder. Implied volatility is steady around 44. Earnings were reported on Jan. 7. Shares are up 10% since that time.

Pfizer (NYSE: PFE) loses 2 cents to $18.45 and PFE Mar 20 Call is today’s most actively traded equity options contract. Today’s 88,283 contracts include a buyer of 50,000 at 8 cents each. Open interest is 14,847 and therefore the call purchase looks like fresh positioning in the pharmaceutical giant. Shares have performed well lately, up 13.2% since November, but have not traded north of $20 since a brief stint one year ago. Earnings will come into play Feb. 1 (before the market opens).

Bearish Flow

Big print in the S&P 500 Index (SPX) pit Wednesday morning after the SPX Feb 1360 – 1370 Call spread trades at 25 cents, 21,225 times. 30,000 total. SPX is up 6.45 points to 1,297.63 and this spread, which was sold, is only 25 cents because it is more than 60 points out-of-the-money with 22 days left till expiration. In this strategy, the investor is pocketing a small amount of premium, but is taking on relatively higher risk (1370 minus 1360 per spread), but is betting that the probabilities will be on his side. That is, it’s not very probable that the SPX will rally beyond 1,360 through the Feb expiration, but it is certainly not impossible.

Implied Volatility Mover

China-Biotics (NASDAQ: CHBT), which was slammed for a 20% loss Friday, is off another 61 cents to $14.87. Shares are reeling today after a story on Seeking Alpha indicated that the Shanghai-based pharmaceutical maker might have inflated revenue numbers. Shares are down and options volume includes 13,000 puts and 3,000 calls. Feb 10, 12.5 and 15 puts are the most actives. Mar 10 puts are seeing interest as well. Implied volatility is up 2% to 107, but off the levels seen Friday when it spiked to 175.
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.