The major averages have traded in another narrow range and are not much changed following a mixed round of economic news Thursday. Weekly jobless claims and Consumer Price Index data was in focus early. While the CPI rose 0.1 percent in February, as economists had predicted, weekly jobless claims fell by a less-than-expected 5,000. Nevertheless, after a tame reading from the PPI yesterday, the two days of benign inflation data set a positive tone for morning action.
Attention turned to the Philadelphia Fed Survey at 10:00 eastern time. The gauge of regional manufacturing activity improved to 18.9 this month, up from 17.6 in February and better than the 18.0 reading economists had expected. Yet, after an 8-day winning streak, the Dow Jones Industrial Average showed little reaction to the better data.
Instead, the Dow has traded in yet another very narrow 46-point range and was up 30 points heading into the final two hours. The CBOE Volatility Index (.VIX) slipped another .33 to 16.58. Trading in the options market is active ahead of tomorrow's "quadruple witch" expiration. Approximately 5 million puts and 7 million calls traded.
Cintas (CTAS) sees somewhat bullish flow ahead of earnings, due out after the closing bell today. Shares are up 22 cents to $27.73 and the focus is on April 30 calls. 3430 traded (24% Mid / 70% Ask) vs.1070 in open interest. One of the top trades is a lot of 328 this morning on ISE, which is an opening buyer, according to ISEE data. Implied volatility is up about 4.5 percent to 30 ahead of the results.
Huge Print in Citi (C) today after an investor sold 217,000 April 4 puts at an average of 16 cents per contract. Citi is flat at $4.05 and this appears to be a new position, as open interest is 189K. 266,500 Citigroup April 4 puts now traded.
Cypress Semi (CY) came under pressure and is off 28 cents to $12.07 in morning trading. Some investors appear to be bracing for additional downside. 11K Jun 12 puts traded (79% Ask). The top trade is a block of 4278 at the 85-cent Ask price on ISE. Implied volatility is up 4 percent to 37. Jun 11 and 13 puts are seeing interest as well, with a mix of buyers and sellers apparently driving the flow. No headlines on the chipmaker yet today. Next earnings due out mid-to-late April.
Implied Volatility Movers
Human Genome Sciences (HGSI) sees a spike on increasing volume and is up 49 cents to $31.73 on renewed takeover speculation. In the options, March 32 calls are seeing interest in recent trade. 3000 now changed hands vs. 2726 in open interest. 33 percent traded Mid and 51 percent at the Ask. (Note: with the expiration at the end of this week, there are plenty of reasons to be skeptical of any chatter today and tomorrow. In this case, implied volatility is flat at 57. Normally, if there's true conviction in a story like this, implied volatility will spike.)
Unusual Volume Movers
Select Sector Financials (XLF) is seeing 6X average daily trading volume, with 1.2 million contracts traded and call volume representing about 90 percent of today's activity.
Select Sector Basic Material Fund (XLB) is seeing 14X average trading volume, with 384,000 contracts traded and calls representing 96 percent of today's trading activity.
Ford Motor (F) is seeing 2X normal trading volume. 277,000 contracts traded, with call options representing about 80 percent of today's volume.