Options Today – Citigroup, NVIDIA, Sprint are Volume Leaders

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 today’s call volume is impressive after Barclay’s 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 what’s 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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