Tuesday Options Recap

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 |  Includes: BAC, BCRX, BIDU, CRI, CVX, EXPE, GOOG, MRVL, NBR, NVAX, PCXCQ, RDC, RSH, SPY, WYNN, X, XOM
by: Frederic Ruffy

Sentiment

The S&P 500 is flat late-Tuesday following a round of mixed earnings news. Some of the energy-related names, including Dow components Exxon Mobile (NYSE:XOM) and Chevron (NYSE:CVX), are seeing gains after BP reported earnings that beat Street estimates and crude oil gained 74 cents to $79.42 a barrel. The Dow Jones Industrial Average is up 40 points heading into the final hour of trading.

However, the tech-heavy NASDAQ is down 20 points after Chinese Internet company Baidu.com (NASDAQ:BIDU) fell on earnings news. BIDU is down $52.33 to $380.64 in late-day action.

The day's economic news didn't help much. The Conference Board reported that its index of consumer confidence fell to 47.7 in October, which was down from 53.4 in September and significantly worse than the 53.4 economists expected.

Risk perceptions are a bit higher for a third day. The CBOE Volatility Index (VIX) is up .38 to 24.69 and extending a two-day winning streak, as the S&P 500 (SPX) risks posting its fifth loss in six days. Meanwhile, trading in the options market remains active, with 5.3 million puts and 6.8 million calls changing hands so far (a ratio of .78, compared to a 22-day average of .79).

Bullish Flow

Patriot Coal (PCX) is up $2.18 to $13.37 after reporting third quarter earnings that met Street estimates, but then said that the fourth quarter is shaping up nicely. Customer demand has stabilized heading into 2010, according to the coal company. Shares are up and 6,235 calls traded, compared to 2,993 puts. Nov 12.5 and 14 calls are the most actives, as some investors position for additional upside in PCX.

Expedia (NASDAQ:EXPE) is down $1.42 to $25.10 and some investors are buying calls ahead of an October 29 (before market) earnings release. 13K calls traded, or about 10X the number of puts. Nov 30s are the most actives. 7,296 traded (vs. 26.2K of open interest) and 59 percent traded ask-side. Implied volatility (average) is moving up to 54, from about 51.4 yesterday, ahead of the earnings news.

Bearish Flow

Carter's (NYSE:CRI) shares tumbled $6.30 to $22.14 and options volume surged to 227X the average daily after the co. delayed the release of its third quarter earnings, which was scheduled for this evening. The co. says it is completing a review of accounting for margin support to wholesale customers. Shares are getting slammed and 16K options traded so far. The action is scattered across Nov and Dec puts and calls with strike prices ranging from 12.5 to 25. Implied volatility (average) rallied to 86.6, from 47.5 late yesterday.

Implied volatility is also higher in Rowan (NYSE:RDC), Motorola (MOT), and Nabors (NYSE:NBR). Meanwhile, implied volatility is lower in US Steel (NYSE:X), Wynn Resorts (NASDAQ:WYNN), and BP.

Implied Volatility Movers

Novavax (NASDAQ:NVAX) is up 24 cents to $4.28 and 4,229 Nov 5 calls traded. Shares are up and players are opening new positions on talk the company might receive an emergency use authorization similar to the one given to BCRX. Implied vols (average) are jumping as well, to 100, from about 89 late Friday.

Implied volatility is also higher in AMR, BofA (NYSE:BAC), and the S&P 500 (SPX). Meanwhile, implied volatility is lower in Biocryst (NASDAQ:BCRX), Marvell Technology (NASDAQ:MRVL), and RadioShack (NYSE:RSH).