Thursday Options Recap

 |  Includes: CLX, GE, GMCR, MA, MCO, NVAX, RMBS, V
by: Frederic Ruffy


Stocks are broadly higher Thursday after an analyst upgraded General Electric (NYSE:GE) and commodities bounced back from the steep losses the day before. GE is up 8.7 percent and the best gainer in the Dow Jones Industrial Average after Goldman Sachs upgraded the stock to Buy from Neutral.

The day's other stock news was mostly upbeat, with Mastercard (NYSE:MA), Visa (NYSE:V), Hartford (NYSE:HIG), and Motorola (MOT) seeing strong post-earnings rallies. Symantec (NASDAQ:SYMC) and Akamai (NASDAQ:AKAM) are down on disappointing results. Meanwhile, many of the commodity-related names are seeing strength after crude oil bounced back from Wednesday's steep losses. Crude oil is up $3.81 to $67.16 a barrel. Gold gained $8 to $937.80 a ounce.

The day's economic data failed to stir much action in the financial markets. The only economic stat of the day -- weekly jobless claims for the period ended July 25 -- showed an increased to 584,000, from 559,000 the week before and ahead of the 575,000 economists had predicted.

In the end, investors shrugged off the jump in jobless claims and seemed to focus on the stock news instead. The Dow Jones Industrial Average is up 155 points heading into the final 45 minutes of trading. The CBOE Volatility Index (.VIX) seems to have found a new home in the mid-20s and is down .50 to 25.11. Trading in the options market is active, with 7.2 million puts and 5.9 million calls traded, a ratio of .81 (compared to a 22-day average of .84).

Bullish Flow

Rambus (NASDAQ:RMBS) is up 82 cents to $17.02 and 11,000 calls traded, compared to 1,500 puts (chart). The call volume represents 6X the expected for the first 90 minutes of trading and is focused on the Aug 17s and 18s. About 7,400 traded and about two-thirds hitting ask-side. The top trade is 712 Aug 17 calls on the ISE, which is an opening customer buyer, according to sentiment data. Implied volatility is moving up to 66, from about 61 the day before. Today's heightened volume and volatility in RMBS comes amid renewed (and unsubstantiated) takeover chatter.

Bearish Flow

Interest in Moody's (NYSE:MCO) puts continues. Open interest increased from 79.1K on July 20 to 152.4K today, or 92.7 percent (chart on web site). Open interest in Moody's puts increased by 19K contracts in the most recent session, compared to a decline of 166 in MCO calls. Shares fell yesterday and are down $1 to $24.52 today after the company reported (Wednesday a.m.) better than expected earnings and revenues, but issued downside guidance for the fiscal year. Another 13K puts traded today, compared to 1,450 calls. While some of the trades are likely closing, ISEE data indicate 45 percent opening customer buyers.

Implied Volatility Movers

Green Mountain Coffee Roasters (NASDAQ:GMCR) saw a day of very volatile trading. Shares hit a low of $60.54, after the company posted strong earnings, but investors seemed disappointed with the revenue numbers. A morning reversal quickly followed, however, and by afternoon trading the stock was up to $72. In the options market, trading is running 5X the usual. Implied volatility is getting crushed amid heavy premium selling. IV is down to 56, from about 74 late Wednesday.

Implied volatility is also lower in Visa (V), Mastercard (MA), and Novavax (NASDAQ:NVAX). Meanwhile, implied volatility is higher in Moody's (MCO), Rambus (RMBS), and Clorox (NYSE:CLX).