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Sentiment

Stocks are trading mixed in a day of relatively quiet market action Wednesday. After falling almost 300 points Tuesday, the Dow Jones Industrial Average has traded in a narrow 138-point range and sits near unchanged heading into the final hour. While an oversold bounce helped lift the industrial average at the open, trading remained cautious following another round of bleak economic data.

A report released early in the day showed housing starts falling to an annualized rate of only 466,000 in January, down from 560,000 the month before and well below economists forecasts for a decline to 529,000. A separate report released a little later showed industrial production falling 1.8 percent last month, also below consensus forecasts of -1.5 percent.

With very little stock news to guide the market action, some of the attention turned to President Obama's housing affordability and stabilization plan as well. Details were unveiled Wednesday morning. The news didn't get a lot of attention, however, and seemed to be met with a collective yawn instead. Consequently, the major averages are flat-lined heading into the final 30 minutes. The CBOE Volatility Index (.VIX) is down 1.19 to 47.47. Trading in the options market is active heading into the options expiration. Approximately 6 million calls and 6.5 million puts traded so far.

Bullish Flow

Taiwan Semiconductor (NYSE:TSM) is up 13 cents to $7.85 and attempting to rebound from a 6.9 percent loss suffered the day before. Directional sentiment in the options market seems bullish, with 6,940 Feb 7.5 calls traded. While existing open interest is 8,917, most of the action has been on the ISE (6,352 calls), where ISEE sentiment data points to 97 percent opening customer call buys.

MarineMax (NYSE:HZO), a Clearwater, FL recreational boat dealer, is seeing bullish order flow. Shares are up 19 cents, or 12.7 percent, to $1.69 and total options volume is running at 60X the normal. The volume is concentrated in the April 2.5 calls and includes a recent purchase of 900 contracts for 30. Most of the day's volume has been in smaller size. Looks like buyers paying 25 and 30 cents.

Bearish Flow

The PHLX Spot Euro Index (.XDE) is down .47 to 125.61 and near three-month lows after the euro gave back earl gains and fell .0032 to 1.2553 against the buck . In the options market, volume has picked up in XDE April 25 puts, with about three-quarters of 11,440 contracts traded hitting ask-side. Existing open interest is only 22, suggesting opening put buys on the index.

Seeing a lot of interest in Caterpillar (NYSE:CAT) puts today, as shares fall 98 cents to a new 52-week low of $28. 53K contracts traded, compared to 20K calls. Recent trades include a sweep of 2500 Feb 25 puts for 8 cents. Today's trades also include a May 25/17.5 1X2 (5000/10000) ratio put spread, a Jan-10 30/22.5 put spread (5000X, tied) and Aug 30/25 put spread (5000X on AMEX).

Implied Volatility Movers

Implied volatility is lower in CardioNet (NASDAQ:BEAT) after the company reported earnings that BEAT expectations. For the most recent quarter, the company posted 16 cents per share on $34.4 mln in revenues. Analysts were looking for 15 cents on $39.9 mln. Shares are up 12.5 percent to $15 and implied volatility is down to 56, from about 68 the day before.

Implied volatility is also lower in Agilent (NYSE:A), General Motors (NYSE:GM) and Mosaic (NYSE:MOS). Meanwhile, implied volatility is higher in Alcoa (NYSE:AA), BofA (NYSE:BAC), and Citi (NYSE:C).

Source: Wednesday's Options Recap