Your daily option s trading wrap up. Sentiment Earnings news was mixed. While
Caterpillar (NYSE: CAT ), Merck (NYSE: MRK ), and Chevron (NYSE: CVX ) moved
higher on earnings, Microsoft (NASDAQ: MSFT ) is down 4.1% and weighing on both
the Dow and NASDAQ on disappointing profit margins. Research In Motion (NASDAQ:
RIMM ) shares lost 13.5% after the company issued a first quarter earnings
warning on diminished Blackberry shipments. Consequently, the Dow Jones
Industrial Average is up 43 points and the tech-heavy NASDAQ lost 2. The CBOE
Volatility Index (CBOE: VIX ) is up .20 to 14.82. Trading in the options market
is running about the typical levels, with 7.4 million calls and 6 million puts
traded so far. Bullish Flow Eastman Kodak (NYSE: EK ), which lost 10% on
earnings news yesterday, is up 3 cents to $2.88. Early options trades include an
EK May-Oct 3.5 Call Spread , bought at 34 cents on AMEX, 5000 times. It probably
rolls a position out a few months. EK May 3.5 calls have open interest of
roughly 20,000. SPDR Industrials (NYSE: XLI ) is touching new 52-week highs.
Shares are up 22 cents to $38.76 and one investor buys 100,000 XLI Jun 40 Calls
at 44 cents each. It probably adds to yesterday's buying, which created
109,779 contracts of new open interest in XLI Jun 40 calls. The exchange-traded
fund, which holds GE, United Tech and the other industrial names from the S&P
500, is up 6.2% during the past eight days. Jun 40 calls are now 3.2%
out-of-the-money with a delta of .30. Bearish Flow Dillards (NYSE: DDS ) adds 7
cents to $48.27 and an investor apparently sells the DDS May 35 – 38 Risk
Reversal at $10.25, 6000 times, and the DDS June 40 – 45 Risk Reversal at
$4.15, 6000 times. Looks like a roll, or closing out a position in May and
opening a new bearish risk-reversal, possibly a collar adjustment. Consumer
Discretionary Select Sector SPDR (NYSE: XLY ) moves to new 52-week highs today
and is up a penny to $40.59. Meanwhile, a 27,650-contract block of XLY Sep 34
Puts is bought-to-open at 48 cents per contract on ISE. 28,800 now traded versus
2,055 in open interest. Implied Volatility Mover Microsoft implied volatility is
easing and options are heavily traded Friday. Shares are down 4.4% to $25.53 and
easily the Dows biggest loser after the company posted EPS numbers that topped
Street views, but profit margins were short of expectations. 359,000 calls and
212,000 puts traded in the software giant so far. The MSFT Weekly 26 Calls ,
which saw heavy trading yesterday ahead of the news, are the most actives. Some
investors are probably scrambling to salvage time value. The contract is now
1.8% out-of-the-money with less than an hour of life remaining. 67,000 contracts
traded. May 26 puts, May 26 calls, May 25 puts and May 27 calls are seeing brisk
trading as well, as investors jockey for position ahead of Microsofts next
short-term move. May options expire in three weeks. Options Flow Bullish flow
detected in AMR (NYSE: AMR ), with 34,043 calls trading, or two times the recent
average daily call volume. Bullish flow detected in Jabil Circuit (NYSE: JBL ),
with 6323 calls trading, or three times the recent average daily call volume.
Bullish flow detected in Avanir Pharmaceuticals (NASDAQ: AVNR ), with 16,204
calls trading, or three times the recent average daily call volume. Increasing
volume is also being seen in Caterpillar, Goodyear Tire (NYSE: GT ), and Sprint
Nextel (NYSE: S ). 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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