Your daily option s trading wrap up. Market Sentiment Stocks slumped on worries
about the economic impact from the last week's devastating earthquake.
Japan's Nikkei plummeted more than 6% Monday and stocks were broadly lower
across Europe before the opening bell on Wall Street. With no earnings of
importance or economic data released Monday, there wasn't much other news to
drive trading. The Dow Jones Industrial Average fell at the open and, despite a
brief midday rally attempt, is down 105 points heading into the final hour. The
tech-heavy NASDAQ lost 22.4. The CBOE Volatility Index (CBOE: VIX ) gained 1.76
to 21.84. Options volume is light, with 7.1 million calls and 6.4 million puts
traded so far. Bullish Flow The surge in Star Scientific (NASDAQ: CIGX )
continues. The stock is up another 58 cents to $3.53 and has now rallied 92% in
the past week. Options action continues as well, with some investors now showing
interest in the CIGX April 4 Calls with 2500 traded versus 188 in open interest.
March 3, Mar 4, April 3, May 2, Aug 3 and Aug 4 calls are also seeing interest
Monday. 19,000 calls and 1680 puts now traded in CIGX. Implied volatility is up
another 6% to 157 and has increased by 65% in the past week. CIGX options saw a
noticeable increase in action beginning last Tuesday and the action continued
throughout the week, including on Friday when the stock surged on news of a
favorable patent decision. Bearish Flow Cameco Corp. (NYSE: CCJ ) gapped at the
open and is off $6.42 to $30.96 on concerns about quake-related damage to
Japanese nuclear reactors. A number of other names in the uranium space Denison
Mines (Amex: DNN ), Uranium Energy (AMEX: UEC ), USEC Inc. (NYSE: USU ), HudBay
Minerals (NYSE: HBM ), Uranium Resources (NASDAQ: URRE ) are also suffering
steep losses on concerns about delays in new projects, shortages, and falling
uranium prices. CCJ is reeling and options volume is four times the daily
average. CCJ Mar 33 and Mar 38 Calls , which are now well out-of-the-money, are
the most actives. CCJ Mar 29 and Mar 30 Puts are seeing interest as well.
Implied volatility surged 60% to 60. Research in Motion (NASDAQ: RIMM ) shares
are off another $1.41 to $61.95 and have tumbled some 13% in the past four
weeks. Notable transactions today are in the RIMM June 80 Call in which 13,000
contracts are purchased at $1.01 while the RIMM Sep 65 Call sees 5,000 contracts
sold at the $6.25 bid; in addition the RIMM May 80 Call trades a total of 6,400
contracts in what looks like opening sale. If this is spreading for a net credit
that would take on a bullish profile if the May calls expire worthless as one
would be left with a Jun/Sep 3×1 back spread. RIMM is slated to report earnings
March 24. Implied Volatility Mover USEC (NYSE: USU ) loses 54 cents to $4.62 on
concerns about the deepening problems at Japanese nuclear reactors. USEC
supplies low-enriched uranium to nuclear power plants and the fallout from last
week's quake could be a game-changer for the industry. Shares are under
pressure and the top trade of the day is a 4,400-contract block of USU Oct 6
Calls on the 25-cent bid, which appears to be an opening call write. The
contract is almost 30% out-of-the-money after today's move. Mar 4 puts, Oct 5
calls, Jan 4 puts, and Oct 5 calls are seeing interest as well. Implied
volatility is up 17.5% to 54. 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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