In options trading today January 5, Citigroup (NYSE: C ) sees a 50,000 contract
bullish call spread, NVIDIA Corp. (NASDAQ: NVDA ) has option volume top 112,000
contracts, but bears appear out for Sprint Nextel (NYSE: S ) as more than 25,000
calls trade. Bearish activity detected in Chicos FAS (NYSE: CHS ), with 6440
puts trading, or 17 times the recent average daily put volume. Bullish flow
detected in TJX Companie s (NYSE: TJX ), with 5852 calls trading, or 12 times
the recent average daily call volume. Bearish activity detected in Novagold
Resources (AMEX: NG ), with 26,593 puts trading, or eight times the recent
average daily put volume. Increasing volume is also being seen in AMR Corp.
(NYSE: AMR ), US Airways (NYSE: LCC ), and Best Buy (NYSE: BBY ). Sentiment
Stock market averages are holding gains with help from better-than-expected
economic news Wednesday. Data released from ADP early showed the U.S. economy
adding 297,000 jobs last month, which was almost three times more than expected.
The strong number comes two days before the Labor Department releases its
monthly jobs report. Separate data released later Wednesday showed the ISM
Services Index up to 57.1 in December, its best level since 2006 and also better
than the 55.7 reading that economists had expected. Overall market action was
sluggish in morning trading despite the strong data, but stocks had moved
broadly higher late in the day. Heading into the final hour, the Dow Jones
Industrial Average is up 38 points and the NASDAQ has added 18. The CBOE
Volatility Index ( VIX ) lost .44 to 16.94. Trading in the options market is
active, with 15.8 million calls and 5.6 million puts traded so far. Bullish Flow
The top options trades so far today are in Citigroup after the C Feb 5 – 5.5
Call spread traded at 13 cents, 50,000 times. Looks buyer-initiated. Another
noteworthy trade is a combo the investor sold 20,000 C Feb 4.5 Puts at 8 cents
to buy 15,000 C Jan 5 Calls at 11 cents. Looks like they did it twice. These
investors seem to be anticipating additional short-term gains in Citi shares.
With an hour to go, the stock is up 4 cents to $4.94 today, now up more than 20%
since late-November. NVIDIA shares add $1 to $16.77 and todays call volume is
impressive after Barclays upgraded the stock to Overweight. More than 112,000
contracts traded so far. The top trade is a NVDA Jan 15 16 Call spread sold at
79 cents, 13,400 times. This spread has traded multiple times and volume in both
contracts is more than 25,000. It likely closes or rolls a position, as both
contracts are now in-the-money and open interest is sufficient to cover. The
NVDA Mar 15 – Jan 2012 20 Call spread traded 5100 times, appears to be rolling
of bullish positions up strikes and out to later months. Shares of the chipmaker
have now rallied 57.8% during the past three months. Bearish Flow Sprint Nextel
adds 12 cents to $4.57 and a block of 14,839 S Jan 5 Calls traded on the 3-cent
bid. With an hour to go, 25,261 contracts have changed hands and, like
yesterday, this appears to be liquidating of bullish trades. Open interest in
the S Jan 5 Calls declined by 20,129 following yesterday's activity, but at
264,514, is still the largest position in Sprint. Implied Volatility Mover China
Green Agricultural (NYSE: CGA) shares are down and implied volatility (IV) is up
after J Capital said the stock is not worth more than $2.85 per share. The firm
says the company has "significantly" over-stated earnings and revenues —
per Fly on the Wall. The stock is off 83 cents to $8.22. Most of the options
action is in the January puts. The top trade is 118 CGA Jan 7 Puts at 60 cents
when the market was 45 – 60 cents. Total of 2046 traded. The CGA Jan 8 Puts
are the most active with 3777 changing hands. Meanwhile, implied volatility
surged 57% to 128. 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 whats trading and explain the potential motivation behind
activity clearly and accurately. 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.
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