Your daily option trading wrap up.
Bullish flow detected in VeriSign (NASDAQ: VRSN), with 7764 calls trading, or three times its recent average daily call volume.
Bearish activity detected in Enterprise Products Partners (NYSE: EPD), with 6560 puts trading, or 14 times its recent average daily put volume.
Bullish flow detected in Colgate Palmolive (NYSE: CL), with 8217 calls trading, or three times its recent average daily call volume.
Increasing volume is also being seen in TEVA Pharmaceutical (NASDAQ: TEVA), Disney (NYSE: DIS), and Sprint Nextel (NYSE: S)
Sentiment
Stocks are holding modest gains on another slow news day Tuesday. With no economic data of importance until Thursday’s claims data, the focus is on events overseas and stock news. Trading on Wall Street was off to a sluggish early start after China announced its second rate hike in six months. However, trading was steady at the open and the Dow Jones Industrial Average had moved to positive territory into midday with help from McDonald’s (NYSE: MCD). Shares are up 3% and one of 24 Dow stocks moving higher after the fast food giant reported strong worldwide sales numbers. The industrial average is up 71 points heading into the final half hour of trading. The tech-heavy NASDAQ has added 9.5. The CBOE Volatility Index (VIX) slipped .23 to 16.05. Overall options trading volume is light today, with 8.3 million calls and 5.5 million puts traded so far.
Bullish Flow
Microsoft (NASDAQ: MSFT) adds 2 pennies to $28.22 and MSFT Feb 29 Calls are among today’s most actively traded contracts early Tuesday. 21,700 contracts have changed hands in morning action. The contract is trading for 9 cents and the total premium value is about $240,000. Nearly two-thirds trading at the offer and, while open interest is sufficient to cover, some short-term speculators might be active in the name after the Seattle Times reports the company is going to shake things up at the executive level. Ballmer wants to promote product executives with strong engineering backgrounds. Citing “two people of knowledge of the decision,” the article notes that, “Changes may be announced this month, said one of the people, who declined to be named because the plans are private.” February options expire in 10 days and the Feb 29s are currently 2.8% out-of-the-money.
March call buying in a number of banks Tuesday morning. Bank of New York (NYSE: BK) is up 24 cents to $32.08 and 5,061 BK March 31 Calls traded (85% on the Ask). PNC Financial (NYSE: PNC) gains 75 cents to $63.50 and 3,603 PNC Mar 60 Calls traded (81% Ask). PNC Aug 55 and Feb 65 Calls are seeing interest as well. JP Morgan (NYSE: JPM) adds 44 cents to $45.64 and 24,363 JPM March 45 Calls traded (53% Ask). Feb 46 and Mar 47.5 calls seeing some action as well. State Street (NYSE: STT) is trading down 12 cents to $47.20 and STT March 46 Calls traded 5130 times (75% Ask). UBS (NYSE: UBS), which touched a new 52-week high on guidance, is up 68 cents to $19.07 and 1,858 UBS Mar 20 Calls traded (100% Ask). It’s not clear what is driving the action, but it’s noteworthy as much of the activity is focused on in-the-money call options and seems to reflect optimism about the sector through mid-March.
Bearish Flow
Starwood Hotels (NYSE: HOT) is up a nickel to $62.90 and action is heating up in puts on the casino operator. The volume includes a multi-exchange sweep of 1,500 HOT Aug 45 Puts at $1.09 and was an opening customer buyer, according to International Stock Exchange data. 2,500 now traded (100% Ask). March 55, 57.5 and 60s are seeing interest as well. Total volume includes 7,000 puts and 1,020 calls. HOT lost 48 cents to $60.33 per share after earnings were reported on Feb. 3, but has managed to recover the losses and is up 4.2% since that time. Today’s flow seems to reflect concerns about losses in the share price in the weeks/months ahead.
Implied Volatility Mover
Tesla Motors (NASDAQ: TSLA) sees a recent spike to $25 and is now trading up $1.38 to $24.45 on news the Obama administration will announce new credits for electric vehicles (unconfirmed). Options action is heating up as well, with 2,345 call and 405 puts traded. TSLA Feb 25 Calls are the most actives with 1,132 traded (89% Ask). TSLA Mar 27 Calls are seeing some interest as well. Implied volatility is up 8% to 67. Other electric car and suppliers A123 Systems (NASDAQ: AONE) and Ener1 (NASDAQ: HEV) are also moving on the news.
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.
