Your daily option trading wrap up. Market Sentiment Stock market averages are
rebounding from morning losses and action has turned mixed late-Thursday.
Attention was squarely on oil prices early after West Texas Intermediate crude
captured the $100 per barrel level. Although OPEC has ample supply to offset the
shortfall from troubles in Libya, the concern is that spreading unrest will
disrupt oil production in bigger producing countries like Saudi Arabia. Yet,
after the early rally to $103.41, crude oil saw a volatile reversal and is now
trading down $1.18 to $96.90 a barrel. Meanwhile, the day's economic news was
mixed. Early data showed Durable Goods up 2.7% in January, which was in-line
with expectations. Jobless claims fell to 391,000 last week, which was better
than the 410,000 that was expected. However, a separate report released later
showed January New Home Sales at an annual rate of 284,000, and significantly
less than the 310,000 that was expected. Yet, at the end of the day, the data
didn't matter too much as the equity market seems to be taking its cue from
action in the oil pits. The Dow Jones Industrial Average is down 10 points and
110 points off session lows. The tech-heavy NASDAQ has added 21. The CBOE
Volatility Index ( VIX ) is under pressure in the final hour, now down 1.23 to
20.90. Volume in the options market includes 9 million calls and 8.3 million
puts. Bullish Flow MGM Resorts (NYSE: MGM ) adds 13 cents to $13.62 and 27,000
calls traded on the casino-operator today, which is not unusual volume, but
compares to put volume of 8,550 contracts. MGM March 13 Calls are the most
active with 4,900 traded and 82% of the volume at the Ask. Looks like some of
the volume in March 14, March 15 and April 15s is being driven by upside call
buyers. Implied volatility (IV) is up 2% to 47.5. Moodys says today that it is
seeing signs of modest recovery in the Las Vegas strip area. Clean Energy Fuels
(NASDAQ: CLNE ), which saw action Tuesday on news UPS (NYSE: UPS ) has
contracted the company, is up another $1.15 to $14.92 on news Knapheide, a maker
of steel truck bodies, has selected the company for CMG fuel systems for Ford
light duty trucks. Call options are busy again today, led by a block of 2827
CLNE Jun 16 Calls at $1.10 when the market was 95 cents to $1.25. Looks opening.
More than 4000 traded. Mar and Sep 15 and 16 calls are seeing interest as well.
Bearish Flow IShares MSCI Emerging Markets Index (NYSE: EEM ) is flat at $44.87
and 23,000 EEM Jun 43 Puts were recently sold at $1.84 each. Another 35,000 were
sold earlier at $1.90 per contract. One or more investors might be unwinding
hedges. Volume in the EEM June 43 Put , which is 4.2% out-of-the-money, is now
71,425 versus open interest of 106,365. Implied volatility in EEM was up 24%
over the past two days and is down 2% to 25.5 midday Thursday. Implied
Volatility Mover Salix Pharmaceuticals (NASDAQ: SLXP ) is down 22.3% to $32.21
and options volume is running eight-and-a-half times the average daily after the
FDA decided the company's Xifaxan antibiotic is not ready for approval. SLXP
March 37 Puts are the most actives, as some players might be liquidating
positions opened prior to the news. Mar 35 calls, Mar 35 puts, Mar 30 puts,
April 40 calls and July 37 calls are seeing interest as well. Implied volatility
is down 42% to 50.5. Trading Flow Bullish flow detected in Linear Technology
(NASDAQ: LLTC ), with 6548 calls trading, or eight times its recent average
daily call volume. Bullish flow detected in Magna International (NYSE: MGA ),
with 2572 calls trading, or four times its recent average daily call volume.
Bullish flow detected in Kodiak Oil and Gas (AMEX: KOG ), with 4113 calls
trading, or six times its recent average daily call volume. Increasing volume is
also being seen in GM (NYSE: GM ), Petrohawk (NYSE: HK ), and Pulte Group (NYSE:
PHM ). 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.
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