Friday Options Recap

Sentiment

Stocks bounced around in morning action, but trading turned mixed late Friday. The Dow Jones Industrial Average opened higher after the Labor Department reported that the US economy lost 345,000 jobs in May, which was significantly better than the 520,000 loss economists had expected.

However, investors sold into the early strength, as the news sparked a sharp rise in bond yields and a rally the dollar, which also sent crude oil and gold prices sharply lower. Then, another reversal mid-morning helped lift the equity market and the Dow was back in positive territory midday.

Since then, trading has been choppy. While the Dow is holding on to a gain, the NASDAQ is down and the S&P is down. With thirty minutes remaining, the CBOE Volatility Index (.VIX) was down .65 to 29.53 and approximately 6.2 million calls along with 4.6 million puts traded. Let the summer doldrums begin!

Bullish Flow

Interest in the metals continues Friday. SPDR Metals and Mining ETF (XME) is up 95 cents to $40.86 and up 7 percent over the past 2 days. Alcoa (AA) is up 5.4 percent and recent trades include an Oct 12.5 - 17.5 call spread, bought 5000X for 93 cents. AKS was mentioned this morning. Cliff Natural Resources (CLF) is up 86 cents to $28.86 and today's trades include 1000 July 30 - 35 call spreads for $1.59. Teck Recources (TCK) sits near $17.50 and looks like premium sellers collecting a hefty $1.17 on June ATM calls.

Goodyear Tire (GT) is up 68 cents to $12.89 and 10K calls traded on the tiremaker Friday, compared to 770 puts. Today's call volume represents almost 4X (384 percent) the expected and is focused on July calls at the 10, 12.5 and 15 lines. Top trade is 1,569 July 15 calls at the offer for 60 cents. Looks like an opening call buyer. Implied volatility steady at 77.

Bearish Flow

Genco Shipping (GNK) is down $1.03 to $24.14 amid relative weakness in the shippers (DRYS, EGLE, EXM, DSX) Friday. In the options market, sentiment seems cautious as well. 12K puts traded on GNK so far, compared to 1,460 calls. The volume includes a purchase of 9,600 Oct 15 puts for $1.30. 10K now traded. It might be tied to some shares, as two blocks of GNK totaling 100K trraded at about the same time. Implied volatility edged up to 88, from about 87 the day before.

American Axle (AXL) is up 2 cents to $2.58 and the Oct 5 - 7.5 call spread trades 10000X today for 25 cents. The spread was sold. Looks like a new position in both contracts and probably on the view that a move beyond $5 (93.8 percent) by the October expiration is unlikely.

Implied Volatility Movers

The CBOE Volatility Index (.VIX) is down despite a loss for the S&P 500 Friday. VIX hit a high of 30.81 and a low of 28.85. The fear gauge was recently down .58 to 29.60. The decline in the VIX comes as investors look forward to a light economic calendar next week and the "summer doldrums" in June.

Implied volatility is also lower in BofA (BAC), Wal-Mart (WMT), and Guess (GES). Meanwhile, implied volatility is higher in Boeing (BA), PNC, and Citi (C).