Bearish activity detected in Chelsea Therapeutics International (NASDAQ: CHTP), with 7410 puts trading, or seven times the recent average daily put volume.

Bullish flow detected in SINA Corp. (NASDAQ: SINA), with 12,235 calls trading, or three times the recent average daily call volume.

Bullish flow detected in STEC Inc. (NASDAQ: STEC), with 10,207 calls trading, or three times the recent average daily call volume in the name.

Increasing volume is also being seen in Genworth Financial (NYSE: GNW), MBIA ((NYSE: MBI), and Verizon (NYSE: VZ).

Market Sentiment

Major averages are little changed in a day of lackluster trading Tuesday one hour before the close. The table was set for morning gains on Wall Street after stocks moved broadly higher across Europe on diminishing fears about the unfolding debt crisis. Some of the optimism stems from talk Japan might begin buying sovereign debt of some troubled Euro-zone nations. In the U.S., the focus is shifting to earnings. Alcoa (NYSE: AA) is trading down 1.3% despite posting better-than-expected results. Sears Holdings (NASDAQ: SHLD) is rallying, but Supervalu (NYSE: SVU) is seeing serious post-earnings weakness. Meanwhile, the only economic stat of the day showed November wholesale inventories down .2%. Economists were looking for an increase of .1%. Bonds slipped on the news, but stocks showed little reaction. Meanwhile, crude oil bubbled $1.87 higher to $91.12 and gold gained $9 to $1383 an ounce. The Dow Jones Industrial Average is up 29 points and the NASDAQ has added 6. With an hour left to trade, the CBOE Volatility Index (.VIX) is off .39 to 17.15. Trading in the options market is running about the typical levels, with 8 million calls and 5.2 million puts traded so far.

Bullish Flow

Patriot Coal (NYSE: PCX) shares are smoking Tuesday, up $2.02 to $25.59 and touching new 52-week highs. Options action is heating up as well, with 30,000 calls and 10,000 puts traded in the name through midday. PCX Feb 30 Calls are the most actives. 6,420 traded. Jan and Feb 25 calls are busy as well. Implied volatility (IV) is up 4.5% to 70 and overall flow is bullish after Deutsche Bank initiated coverage on PCX with a Buy rating.

Bearish Flow

Advanced Micro Devices (NYSE: AMD) shares are off 79 cents to $8.40 and options volume is running three times the usual today after the company’s CEO Dirk Meyer announced his resignation. Shares are under pressure and calls are being sold. The top trade is 1345 Feb 8 calls at 78 cents when the market was 78 to 80 cents. Total of 15,213 traded (92% on the bid) versus 14,874 in open interest. Jan and Feb 9 calls are seeing interest as well. Meanwhile, Feb 8 puts have traded 2250 times (68% on the asking price). Jan 6 and 7.5 puts are trading predominantly at the asking price as well. Overall, the flow seems somewhat bearish and IV is up about 7% to 53.5.

Implied Volatility Mover

Cabot Oil and Gas (NYSE: COG) adds 72 cents to $38.32 and one strategist sells the Feb 37 straddle at $3.52, 1980 times. Looks opening and possibly a bet that shares will drift towards $37 by the February expiration. Implied volatility is easing 5.5% to 35, compared to a 52-week high and low of 63 and 31.

How we interpret:
Sophisticated real-time tools created by TradeAlert for institutional traders are used to provide indication of buyer and seller, opening trades, greeks, and more. In conjunction with our market expertise, historical data and a network of brokers and market participants we are able to clarify what’s trading and explain the potential motivation behind activity clearly and accurately.

Author Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications.