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The market opened flat after mixed economic data was reported. The initial claims number of 343k was lower than the market expectation of 375k, and the continuing claims number of 3198k was slightly below the expectation of 3200K. However, retail sales number of 0.3% was below the market expectation of 0.4%. The market started to turn around at 10:20AM and continued to decline as the concern on fiscal cliff continued.

NASDAQ declined with 0.72% loss and Dow Jones closed with a 0.56% drop. S&P 500 also joined the decline with 0.63% loss. PowerShares QQQ Trust ETF (NASDAQ:QQQ) fell below its 50-day MA of $65.58 and 200-day MA of $65.40 and closed at $65.31. SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) still stayed above its 50-day MA of $130.84 by closing at $131.82. SPDR S&P 500 ETF (NYSEARCA:SPY) also remained above its 50-day MA of $141.85 and closed at $142.63. Consumer cyclical sector led all the sectors with 0.93% loss while transportation sector was the only sector gaining with 0.05% increase.

For NYSE, 915 stocks advanced, 2,128 declined, and 112 stayed neutral. For NASDAQ, 926 stocks advanced, 1,543 declined, and 120 stay unchanged. Top 3 stocks with unusual call activities on Thursday had been identified and will be presented for investors to research further.

Name (Ticker)

Call Volume

Average Call Volume

Daily Volume Ratio

Best Buy Co., Inc. (NYSE:BBY)

113,099

16,535

6.84

Big Lots, Inc. (NYSE:BIG)

10,159

1,504

6.75

Phillips 66 (NYSE:PSX)

80,684

13,022

6.20

Source: Schaeffer's Research

Best Buy Co., Inc.

BBY is the largest U.S. consumer electronics retailer, with 18% of the $195 billion market in 2011. BBY surged 17.16% in premarket as the founder Richard Schulze is expected to make a formal takeover offer this week. Mr. Schulze's bid would be at least $5-6 billion. BBY closed at $14.12 on Thursday with a gain of 15.93%. The volume of 44.06M is 4.56x of the 30 day average volume of 9.67M. BBY currently has a market cap of $4.77B.

As seen from the chart below, the MACD (12, 26, 9) started to show a bullish sign since Dec. 30, 2012. The MACD difference continued to diverge since Dec. 4. The momentum indicator, RSI (14) had increased to 56.56, indicating an increasing buying momentum. By closing at $14.12, BBY was approaching its 50-day MA of $14.83. If BBY can break through its 50-day MA, the next major resistance will be $18.60, its 200-day MA.

(click to enlarge)

Source: StockCharts.com

The most active call contracts were Dec 21, 2012 with the strike prices of $15.00 and $14.00. $15 call had the volume of 17,905 with an open interest of 19,879. The volume of $14.00 call was 15,942 with an open interest of 12,135. $15 call has the implied volatility of 105.0, and the chance of breakeven is 24.85. $14 call has the implied volatility of 102.7, and the chance of breakeven is 32.96. The historical volatility for BBY is 74.07 for 1 month, 53.52 for 3 months, and 43.24 for 1 year.

Big Lots, Inc.

BIG is a North America's closeout retailer. BIG's stores offer brand-name closeout items in a variety of categories at prices that are 20%-40% below those of discount stores. BIG closed at $27.76 with 0.40% gain Thursday. The volume of 1.25M was 20.38% lower than the 30 day average of 1.57M. BIG had been trading in the range of $26.69-$47.22 in the past 52 weeks. BIG has a beta of 0.89.

As seen from the chart below, BIG was currently trading below its 200-day MA of $36.23 and 50-day MA of $29.15. The MACD (12, 26, 9) was showing a bearish sign with a slightly diverged MACD difference on Thursday. The momentum indicator, RSI (14), was lowered to 44.47, indicating an increasing selling momentum. BIG is technically bearish in the short term.

(click to enlarge)

Source: StockCharts.com

Without major news announcements and being technically bearish, BIG's unusual activities on call options were worth to take a look. The most active call was Jan. 18, 2013 call at the strike price of $30.00 with the volume of 9,461 and with an open interest of 1,677. The implied volatility is 38.9, and the chance of breakeven is 19.99. The historical volatility for BIG is 52.48 for 1 month, 38.74 for 3 months, and 46.24 for 1 year.

Phillips 66

PSX is a holding company engaged in producing natural gas liquids, NGL, and petrochemicals. PSX is also an independent refiner with 15 refineries with a total throughput capacity of 2,485 m/d. The Company closed lower today as the Company indicated its intention to redirect some of its transportation assets to form a master limited partnership and also unveiled a $3.7 billion capital program for next year, up 6% from 2012's estimate. As reported from MarketWatch,

"Phillips 66, which ConocoPhillips (NYSE:COP) spun off earlier this year, said it expects to sell a minority interest in the new company in an initial public offering in the second quarter of next year. The transaction would yield between $300 million and $400 million, the company said. The assets could include crude and product pipelines and terminals, natural gas liquids assets, or rail cars and infrastructure, but it was unclear what portion of Phillips 66's business would go to the MPL."

PSX closed at $52.21 with 1.58% gain on Thursday. The volume of 7.14M is 59% more than the 30 day average volume of 4.49M. PSX had been trading in the range of $28.75-$54.32 in the past 52 weeks. The stock has a market cap of 32.67B with P/E of 6.12. PSX is currently trading above its 50-day MA of $47.99 and 200-day MA of $39.34, and the next resistance is $54.95, the R1 pivot point.

The most active call option was Jan. 18, 2013 at the strike price of $60.00 with a volume of 43,250 and an open interest of 28,844. The implied volatility is 33.8, and the chance of breakeven is 8.23. The historical volatility for PSX is 26.94 for 1 month, 29.64 for 3 months, and 30.54 for 6 months.

Note: All numbers/prices are quoted from the closing of December 13, 2012 with the data provided from Barron's, MorningStar, Schaeffer's Investment Research, Inc., Google Finance, and Yahoo! Finance. Investors and traders are recommended to do their own due diligence and research before making any trading/investing decisions.

Source: Top 3 Stocks With Unusual Call Activities On Thursday