Monday's Options Recap

Sentiment

Stocks are under pressure Monday, as investors returned from the weekend to find an empty economic calendar and headlines about problems in the banking world. A number of large financial institutions are tapping the equity market for much needed capital and concerns about the overall capital levels in the industry has the sector giving back some of the big gains seen the week before.

Meanwhile, commodity-related names, which also saw a big run last week, are pulling back after crude oil slipped 39 cents to $58.24 a barrel. Gold is little changed at $914.50 an ounce. Bonds ripped higher after banks buckled and ahead of key retail sales and inflation data later this week. The benchmark ten-year Treasury is up nearly 1 point and yields 3.17 percent.

Financials and some of the commodity-related names are leading the Dow to a 130 point loss late Monday. Trading in the options market is on the light side, with about 35 minutes to trade and 7.2 millions calls along with 5.6 million puts tradeD so far. The CBOE Volatility Index (.VIX) edged up .50 to 32.55, but remains near 7-month lows.

Bullish Flow

Advanced Micro (AMD) is up 29 cents to $4.22 and calls are active after Reuters and others reported that EU antitrust officials will say this week that Intel (INTC) is anti-competitive. An EU executive will add that Intel gave rebates to computer makers to restrict or eliminate the use of rival AMD's chips. AMD is up on the news and May 4 calls are the most actives. 7150 traded by midday and about 92 percent traded ask-side. 11K calls traded total, compared to 400 puts.

Peoples United Financial (PBCT) is up 43 cents to $16.80 and options volume is running 4X the average daily. 6,100 calls and 240 puts traded today after Jim Cramer made positive comments about the company in a weekend installment of Mad Money. Almost 3000 June 17.5 calls traded, and 54 percent hitting ask-side. Similarly, ISEE sentiment data indicate that 55 percent of the calls traded on the ISE today are opening customer call buys.

Bearish Flow

Semiconductor equipment maker Applied Materials (AMAT) is down a nickel to $11.84 and almost 10K June 10 puts traded ahead of the company's earnings report (Tuesday, after market). The top three trades (2,045, 1,169, and 899 contracts) traded on the PHLX around 10:40 and hit at the offer (30 cents). Existing open interest is 1,362 and the activity seems to be put buying ahead of earnings. Implied volatility is up to 60.6 from 58.3 late Friday.

Verisign (VRSN) is up 17 cents to $24.43 and options volume is running 22X the usual after a player bought the Sep 20 - 25 (2X1) put ratio spread 25000X for $1.00 on the CBOE. Looks like a new position and, if so, a bearish one with a max profit of $4 if VRSN settles at $20 per share at the Sept expiration.

Implied Volatility Movers

General Motors (GM) is down 16 cents to $1.45 and implied volatility is higher after the Associated Press published a story over the weekend suggesting that bankruptcy was probably in the automaker's future. Shares are leading the Dow lower and implied volatility in GM options is up.

Implied volatility is also higher in Applied Materials (AMAT), Vanda Pharmaceuticals (VNDA), and BB&T (BBT). Meanwhile, implied volatility is lower in Dish Networks (DISH), eTrade (ETFC), and Ambac Financial (ABK).