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Visa, Semi-Conductors Lead Options Volume

Commodities plunge takes down the market


Your daily options trading wrap up.


Stocks are broadly lower. The Labor Department reported weekly jobless claims increased by 43,000 in the final week of April though economists had said claims would fall by 31,000. A separate report showed first quarter productivity up a better-than-expected 1.6%. Key monthly jobs data due Friday morning. Meanwhile, mini-crash in commodities is raising eyebrows. Crude oil plummeted $10.90 to $98.34 on concerns about the economy and a 1.6% pop in the dollar index. The buck benefits from expectations for intervention to slow the yen, dovish comments from ECB President Trichet, and diminished expectations for an ECB rate hike in June. Silver lost 10% and gold gave up 3%. With thirty minutes left to trade, the Dow Jones Industrial Average is down 183 points and sinking to session lows. The tech-heavy NASDAQ is now down 16 points. CBOE Volatility Index (CBOE: VIX) gained 1.76 to 18.84. Trading in the options market is active, with 9.7 million calls and 9.1 million puts traded so far.

Bullish Flow

KLA-Tencor (NASDAQ: KLAC) calls are active amid relative strength in the chip equipment stocks today. KLAC is up 95 cents to $44.78 per share. 6,300 calls and 1,330 puts have traded in the name. The top trade is a 428-contract lot of KLAC June 46 Calls at the $1.65 asking price. Total of 1,050 traded. KLAC June 47 Calls are the next most actives with 932 changing hands. Sep 43 and 55 calls are seeing interest as well. No news on the stock today. Novellus (NASDAQ: NVLS) is higher after the company announced plans for a $525 million offering of notes, which it will use to buy back shares. Teradyne (NYSE: TER) and Xilinx (NASDAQ: XLNX), two other names in the same space, have also been the subject of bullish trading.

Visa (NYSE: V) is down $1.09 to $78.68 ahead of earnings, due after the close. Options volume includes 12,000 calls and 2,065 puts. The top trade of the day is a 1,800-contract block of V Jun 80 Calls at the $2.21 asking price. Total of 2,729 traded with 70% on the ask. Beyond that, a lot of the volume seems driven by call writers. V May 82.5 Calls are the most actives with total of 3,062 traded, 87% on the bid. Similar action is being seen in the May 80 calls. Implied volatility is up 4% to 27.5. MasterCard (NYSE: MA) released its results Tuesday. Shares moved up 2.6% on the news, but have been trading lower since then.

Find more option analysis and trading ideas at Options Trading Strategies.

Bearish Flow

Kraft Foods (NYSE: KFT) is down 35 cents to $33.50 and 28,000 options have traded ahead of the company’s earnings, which are due after the close. Most of the action has been on the put side of the options chain. 25,000 traded. In addition, the action is heavily concentrated in the June 29 and 32 puts. One investor bought 7,760 KFT June 32 Puts at an average of 26.5 cents and sold 4,400 KFT June 29 Puts at 5.5 cents. Both contracts have now traded more than 10,000 contracts and appear to be opening activity. Some investors seem to be bracing for a move in Kraft shares below $32, but not beyond $29, through the June expiration. Shareholders looking to hedge positions might be initiating the trades.

Implied Volatility Mover

GM (NYSE: GM) shares are down 82 cents to $32.22 after the auto-maker reported earnings and revenues that topped analyst estimates. A good report might have been baked in the cake after a 10-day, 11.7% rally in GM shares. Meanwhile, overall options volume includes 18,000 calls and 6,500 puts in the first hour. The top trade is a 3,400-contract block of GM May 34 Calls at 25 cents when the market was 15 to 25 cents. Looks like a buyer and might be a closing trade. The contract is 5.5% out-of-the-money and expires in 15 days. 4,594 now traded versus 13,926 in open interest. The next biggest trade is a 2,500-contract block of GM Jan 30 Puts on the $2.40 bid. May 33 and the Weekly 32 and 33 calls are seeing interest as well. While shares are down, the overall options order flow seems to be somewhat bullish in GM today. Implied volatility has eased 16% to 29, compared to a 52-week high and low of 41 and 20.

Option Flow

Bullish flow detected in ConAgra Foods (NYSE: CAG), with 18,967 calls trading, or seven times its recent average daily call volume.

Bullish flow detected in ProShares UltraShort Euro (NYSE: EUO), with 8020 calls trading, or four times its recent average daily call volume.

Bullish flow detected in Baker Hughes (NYSE: BHI), with 28,914 calls trading, or three times its recent average daily call volume.

Increasing volume is also seen in the PowerShares Bullish US Dollar Fund (NYSE: UUP), Oil Service HOLDRS (NYSE: OIH), and iShares Silver Fund (NYSE: SLV).

Frederic Ruffy is the Senior Options Strategist at, a site dedicated to helping traders make sense of the complex and fragmented nature of listed options trading.

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