This article is by Frederic Ruffy, 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.

Bullish flow detected in E Commerce China Dangdang (NYSE: DANG), with 11,369 calls trading, or five times its recent average daily call volume.

Bullish flow detected in International Coal Group Inc. (NYSE: ICO) with 6604 calls trading, or three times its recent average daily call volume.

Bullish flow detected in Arm Holdings (NASDAQ: ARMH), with 15,689 calls trading, or three times its recent average daily call volume.

Increasing volume is also being seen in Yahoo (NASDAQ: YHOO), Intel (NASDAQ: INTC), and JP Morgan (NYSE: JPM). 

Sentiment

Reporting one hour before the close, major averages slipped on disappointing earnings data early and are lower Thursday afternoon ahead of earnings from Intel and JP Morgan. The table was set for morning losses on Wall Street after the Labor Department reported that filings for weekly jobless benefits increased by 25,000 in the latest period, 20,000 more than expected. A separate report showed the Producer Price Index [PPI] up 1.1% in December, which was .3% hotter than expected. Stocks slipped on the data, but trading had turned mixed midday. Then, another wave of selling surfaced about 90 minutes before the closing bell, as investors now brace for earnings news. Tech bellwether Intel releases results after market. JP Morgan could drive the action in the financials Friday ahead of the three-day weekend. The bank is due to report tomorrow morning. The Dow Jones Industrial Average is down 32 points and the NASDQ is off 3.5 points ahead of the numbers. With less than an hour left to trade, the CBOE Volatility Index (VIX) has added .32 to 16.56. Trading in the options market is active, with 9.6 million calls and 6.1 million puts traded on the session.

Bullish Flow

Research In Motion (NASDAQ: RIMM) adds $1.64 to $65.17 and some investors are filling it to the RIMM with Jan calls on the Blackberry maker Thursday morning. Jan 67.5s are the most actives with 11,714 traded. Another 10,745 RIMM Jan 65 Calls changed hands. Weekly options (expiring Jan. 14) 65 and 67.5 calls are seeing interest as well. Total options volume includes 78,000 calls and 39,000 puts. Implied volatility (IV) in RIMM options is up 3% to 33, compared to a 52-week high and low of 58.5 and 29. Shares are displaying relative strength today and are now up 12.1% year-to-date. Earnings were last reported on Dec. 16.

Bearish Flow

Steve Smith notes for WhatsTrading.com today that “Big Prints in search giant Yahoo, as the YHOO April 14 Puts and April 19 Calls each trade 30,000 contracts in what looks like opening bearish risk/reversal (calls sold, puts bought) for 4 cent net debit. Probably tied to a block of 1.44 million shares at $16.65.”

Implied Volatility Mover

KLA-Tencor Corp. (NASDAQ: KLAC) adds 88 cents to $39.87 and today’s options action includes a multi-exchange sweep of 6,759 KLAC Jan 50 Calls at 50 cents when the market was 40 to 50 cents. One hour before close, 7,444 traded vs. 1,383 in open interest. Looks like opening activity in Jan 41 and Jan 50 calls as well. Total 11,000 call options and 850 puts now traded on the chip equipment maker after Oppenheimer raised the stock to Market Perform from Underperform. Implied volatility is up 6.5% to 32.5. Earnings expected around Jan. 27 and probably after next week’s expiration.