Friday's Options Recap

Sentiment

Stocks turned in another mixed trading session Friday. With little news to guide the morning action, the focus was on falling commodities prices and consumer sentiment data. A report released from the University of Michigan Friday morning showed modest improvement in consumer sentiment in early June, to 69 from 68.7 in May. Economists were looking for an increase to 69.5.

Meanwhile, crude oil slipped 63 cents to $72.05 and gold had a rough day, trading down $21.50 to $940.50 an ounce. Some of the energy and mining names took the news hard. The PHLX Oil Service Index (OSX) is down 5.00 to 183.72 and the PHLX Gold and Silver Mining Index ((.XAU)) gave up 4.04 to 145.64.

Yet, while some sectors struggled, others seemed to find solace in falling bond yields. The benchmark ten-year Treasury note gained 16/32nd and its yield dipped below 3.8 percent, well below the 4 percent seen shortly after poor results at a bond auction sent yields higher (and stocks lower) late Wednesday.

In the end, trading is mixed. The Dow Jones Industrial Average is holding a modest 25 point gain heading into the final forty-five minutes of trading. The NASDAQ is down 8. The lack of volatility has the CBOE Volatility Index (.VIX) slipping .21 to 27.90. Trading in the options market is slowing ahead of the weekend, approximately 5.6 million calls along with 4.7 million puts traded on the session.

Bullish Flow

Volatility continues in Sequenom (SQNM). Shares of the San Diego-based biotech company surged nearly 60 percent Tuesday. The move was attributed to talk of a possible resolution of an anticipated launch of SEQureDX DS, which was delayed in April due to mishandling of test results. No new information surfaced Wednesday and SQNM fell back to $4.09. However, the stock moved up yesterday and added another 46 cents to $4.71 today. SQNM is up 40.6 percent since Monday and some players are looking for additional upside, with active trading in June and July 5 calls. 12.5K traded so far. Implied volatility remains elevated around 150.

Bearish Flow

Put buyers zoomed in on Eastman Kodak (EK) Friday. Shares are unchanged at $2.89 and July 2.5 puts are the most actives. 2,846 traded and more than 70 percent traded ask-side of the bid-ask spread. ISEE sentiment data, which tracks whether orders are opening buyers or sellers, is consistent with opening customer put purchasing. Looks like buyers in Oct 2.5 puts as well. The demand for options premiums is sending implied volatility towards 100, from about 94 the day before.

Implied Volatility Movers

Savient Pharmaceuticals (SVNT) rallied more than 50 percent on hopes for next week's FDA panel review of Krystexxa. Premiums have become rich ahead of the decision, but today's rally has resulted in heavy option selling. Implied volatility is easing to 188, from 270 late Thursday.

Implied volatility is also lower in Cal Dive (DVR), Wells Fargo (WFC), and NVidia (NVDA). Implied volatility is higher in BofA (BAC), Emulex (ELX), and Sequenom (SQNM).