Your daily options trading wrap up.
Market Sentiment
Stock market averages continue to climb higher Thursday. Economic data was in focus early after the Labor Department reported that the Consumer Price Index [CPI] edged up .4% in January, which was .1% more than expected. Separate data showed jobless claims up by 25,000 last week and in-line with expectations. Trading was sluggish on the data early, but stocks found some buying interest at 10:00 Eastern on news the Philadelphia Fed Survey surged to 35.9 in February. What?! Economists were looking for an increase to 21 from 19.3. The Dow Jones Industrial Average was sporting a modest gain through midday and was able to build the strength in the second half of trading. With 45 minutes left to trade, the Dow is up 38 points and the NASDAQ has added 7.5. The CBOE Volatility Index (VIX) gave back .14 to 16.58. Options volume is surprisingly light given that February options expire Saturday. 9.1 million calls and 6.7 million puts traded so far.
Bullish Flow
Nabors Industries (NYSE: NBR), which saw heavy trading Tuesday ahead of earnings, is trading up 69 cents to $27.43 and has now added 5.7% since the results were released. Options order flow is bullish again today. NBR Mar 27 Calls are the most active with 6,665 traded and 73% trading at the Ask. The open interest is 2,525 and it looks like buyers are dominating the action and opening new positions. NBR Jun 29 and 31 Calls are apparently being bought-to-open as well. Implied volatility is up 5% to 39.
Citi (NYSE: C) adds 3 cents and recent trades include a bullish three-way play, in which the strategist sold 40,000 C Jan 4 Puts to buy the C Jan 5 – 5.5 Call Spread, 40,000 times. Two cents was collected on the package.
Bearish Flow
Human Genome Sciences (NASDAQ: HGSI) is flat at $26.17 and 6,280 HGSI Mar 22 Puts traded so far with 81% at the Ask, and open interest is 468. Implied volatility is up 4% to 81.5. Some investors might be hedging shares after a 9.6% gain in HGSI since Jan. 28 ahead of an FDA decision regarding the company’s pivotal Benlysta Lupus drug. It was postponed from late-December to March. Relatively high volume in March strikes seems to reflect expectations for a decision prior to the March expiration.
Implied Volatility Mover
Family Dollar Stores (NYSE: FDO) calls are active, the day after shares surged 21.1% on reports Nelson Peltz’s firm is looking to buy the company. Shares have given back 34 cents to $52.91 and today’s options volume of 15,000 calls and 3,375 puts is three and half times the average daily. In-the-money calls are the most actives. 5,356 FDO Mar 50 Calls traded. Another 3,560 FDO April 49s Calls traded (99% Ask) vs. 236 in open interest. Looks like some investors are taking new bullish positions in in-the-money calls and bracing for gains in shares over the next few weeks. Implied volatility, which jumped about 60% yesterday, is up another 14.5% to 40.
Bullish flow detected in Infinera (NASDAQ: INFN), with 4597 calls trading, or two times its recent average daily call volume.
Bullish flow detected in Medifast (NYSE: MED), with 3225 calls trading, or three times its recent average daily call volume.
Bullish flow detected in Nabors Industries (NYSE: NBR), with 21,358 calls trading, or four times its recent average daily call volume.
Increasing volume is also being seen in Brocade (NASDAQ: BRCD), NVidia (NASDAQ: NVDA), and Advanced Micro Devices (NYSE:AMD).
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.
