Your daily options trading wrap up.
Sentiment
Stock market averages are holding gains for the eighth time in ten trading days. Jobs data was in focus early Wednesday after ADP reported that the US economy added 201,000 private sector jobs in March. The number was roughly in-line with economist estimates (210,000) and failed to have much market impact. Meanwhile, a deal was announced after Valeant Pharmaceuticals (NYSE: VRX) made an unsolicited $5.7 billion bid for Cephalon (NASDAQ: CEPH). Beyond that, it’s been a relatively light news day and the bullish momentum continues. With an hour left to trade, the Dow Jones Industrial Average is up 93 points. The tech-heavy NASDAQ added 20. The CBOE Volatility Index (CBOE: VIX) gave up .63 to 17.53 and overall options volume is light for a third day with 6.7 million calls and 5.4 million puts traded so far.
Bullish Flow
Mosaic (NYSE: MOS) is up 66 cents to $79.51 and options order flow is turning bullish ahead of earnings. June 85 and 100 calls are the most actives, with more than 4,000 traded in both contracts. The top trades surfaced early and included a multi-exchange sweep of 1,522 MOS June 85 Calls at the $3.80 asking price. At about the same time, the MOS June 85 – 100 Call Spread was apparently bought at $2.99, 775 times. A total of 19,000 calls and 4,775 puts have now traded, as some investors seem to be expecting upbeat earnings news when Mosaic releases its results after the closing bell today.
Bearish Flow
VirnetX Holding (AMEX: VHC), a Scotts Valley, Calif.-based software developer for communication over the Internet, is up $1.12 to $20.41 and is in the midst of an impressive eight-day, 63.7% winning streak. Options are actively traded today as well. VHC April 20 Puts, which are 41 cents out-of-the-money and have open interest of 291, are the most actives. 3,470 traded (75% on the Ask). April 19 puts, April 20 calls, April 21 calls and April 21 puts are seeing brisk trading as well. VHC was the subject of a bullish article on Seeking Alpha yesterday, which noted, among other things, “VirnetX is now on the brink of becoming a key technology licensing company,” and “it is worth billions”. Some of today’s put buyers might be taking the opposing view or perhaps buying puts to protect recent gains in VHC shares.
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Implied Volatility Mover
Visa (NYSE: V) and MasterCard (NYSE: MA) are trading higher today on news the Fed will miss a deadline for a decision regarding debit card fees. MA is up $3.60 to $255.31 and V added $2.30 to $74.50. However, both stocks are well off session highs and came under fire about thirty minutes ago (2:45 ET) on heavy volume. The catalyst for the afternoon sell-off isn’t clear, but MA is now off 2.7% from its best levels and V down 1.1%. Meanwhile, options volume is brisk in both names. MA total volume is 4.5 times its average daily, with 15,000 calls and 6900 puts traded. In Visa, 59,000 calls and 49,000 puts traded, or five times its average daily. Investors are taking positions and bracing for increasing volatility. Implied volatility in MA is up 12% to 29. Visa implied volatility increased to 27 from 25.5.
Options Flow
Bullish flow detected in Somaxon Pharmaceuticals (NASDAQ: SOMX), with 5981 calls trading, or two times its recent average daily call volume.
Bullish flow detected in Valeant Pharmaceuticals (NYSE: VRX), with 16,507 calls trading, or 14 times its recent average daily call volume.
Bullish flow detected in Weight Watchers (NYSE: WTW), with 4632 calls trading, or three times its recent average daily call volume.
Increasing volume is also being seen in AT&T (NYSE: T), Cephalon (NASDAQ: CEPH), and Dell (NASDAQ: DELL).
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.
