Your daily options trading wrap up.

Sentiment

Stock market averages are rallying around earnings and deal news Wednesday. Dell (NASDAQ: DELL) computer shares are up 13.4% after the computer maker reported profits that easily topped Street views. Meanwhile, action continues on the merger front, with Nelton Peltz’s firm making a play for Family Dollar (NYSE: FDO) while Genzyme (NASDAQ: GENZ) and Sanofi (NYSE: SNY) are finalizing terms of a long-awaited deal. The day’s economic news was mixed. Housing Starts jumped to an annual rate of 596,000 last month, much better than the 540,000 that economists were expecting. The Producer Price Index [PPI] printed at .8% for January and a little hotter than the .7% that was anticipated. Meanwhile, Industrial Production fell .1% and was much worse than the .6% increase that economists had forecast. Yet, the focus seems to be on domestic stock news. The Dow Jones Industrial Average has added 64 points and the tech-heavy NASDAQ gained 23.5. The CBOE Volatility Index (VIX) edged up .20 to 16.57 ahead of the expiration. Trading in the options market is active, with 10.1 million calls and 7 million puts traded so far.

Bullish Flow

Sirius XM Radio (NASDAQ: SIRI) adds a dime to $1.79 early Wednesday and is trying to rebound from a 6.8% post-earnings slide suffered yesterday. A noteworthy options trade in the satellite radio provider is a block of 16,780 SIRI Jan 2 Calls at 28 cents when the market was 25 to 28 cents. 22,480 now traded (99% on the Ask). SIRI Sep 2 Calls are seeing interest as well. Implied volatility is up 5.5% to 57.5, as some investors appear to be looking for SIRI to move beyond $2 per share in the months ahead.

Advanced Micro Devices (NASDAQ: AMD) continues its run higher. Shares are up 44 cents to $9.05 and its best levels of the day. The top options trade is a block of 10,000 AMD Feb 8 Calls at 79 cents, probably a liquidating trade ahead of the expiration. 13,540 now traded. A block of 6,500 AMD Jan 7.5 Puts traded on the 81-cent bid and might also be a closing trade. Meanwhile, 5,000-contract block of AMD Mar 9 Calls at 48 cents on the International Stock Exchange is an opening buyer, according to ISEE data. 13,135 traded. Feb 9, Mar 10, and April 10 calls are seeing interest as well. Total volume is 56,000 calls and 13,000 puts. Overall flow in AMD has been bullish lately amid relative strength in shares of the chipmaker. The company reported earnings on Jan. 20 and, although shares dipped in the days that followed, AMD is up 12.8% since that time. Implied volatility has eased 2% to 48.5 on the session.

Bearish Flow

91,000 calls and 137,000 puts traded in Wells Fargo (NYSE: WFC) through midday. Shares are down 80 cents to $32.88 on news of the abrupt exit of the company’s CFO Howard Atkins, which some view as a sign of internal conflicts within the bank about disclosure practices. The top options trade is a block of 3,000 WFC March 32 Puts at 80 cents, which appears to be an opening customer buyer, based on ISEE data. 19,500 traded. Volume in the WFC March 33 Calls is 27,000 contracts. Players are jockeying for the next move in the stock and implied volatility is up 4% to 30.5.

Implied Volatility Mover

DELL rallies $1.77 to $15.68 after the computer maker reported a quarterly profit of 53 cents per share, which blew past analyst estimates of 37 cents. Options volume is heavy. 200,000 calls and 104,000 puts traded so far. The top trade is a DELL Jan 12.5 – 17.5 Strangle sold at $1.45, 12,500 times on the NYSE AMEX. Implied volatility is down 23% to 30, compared to a 52-week high and low of 54 and 25.5.

Flow Indicators

Bullish flow detected in Steel Dynamics (NASDAQ: STLD), with 15,009 calls trading, or nine times its recent average daily call volume.

Bullish flow detected in Lear (NYSE: LEA), with 5537 calls trading, or nine times its recent average daily call volume.

Bearish activity detected in China Agritech (NASDAQ: CAGC), with 10030 puts trading, or three times its recent average daily put volume.

Increasing volume is also being seen in NVidia (NASDAQ: NVDA), and Marvell Tech (NASDAQ: MRVL).

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.