Thursday Options Recap

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 |  Includes: AMZN, BAC, BBY, BRCD, ORCL, QCOM, RRC, SPY
by: Frederic Ruffy

Sentiment

Stocks moved up early on better than expected jobless claims numbers and are holding modest gains late Thursday. The table was set for morning gains after the Labor Department reported that claims fell by 14,000 to 442,000 last week, which was better than the 6,000 drop that economists had expected. Meanwhile, a strong earnings release from Best Buy (NYSE:BBY) helped the retailers and the tech sector is getting a lift from upbeat guidance from Qualcomm (NASDAQ:QCOM).

With forty-five minutes left to trade, the Dow Jones Industrial Average is up 74 points. The tech-heavy NASDAQ added 20. The CBOE Volatility Index (.VIX) is little changed at 17.60. Trading in the options market is brisk. Approximately 5.7 million puts and 7.4 million calls traded across the eight options exchanges.

Bullish Flow

Qualcomm (QCOM) has seen a day of brisk trading, with almost 200K options traded on the chipmaker so far. Shares are up $2.65 to $42.84 after the company boosted its second quarter guidance on stronger performance from licensing and chip set businesses. 126K calls and 70K puts traded on the news. Top trades included a seller of 10K April 45 calls against a position in shares, 10000X, and an April – July 45 call spread at $1.18, 5000X. April puts and calls with strike prices ranging from 39 to 47 are among the most actives. Meanwhile, implied volatility is down 12 percent to 23.5, as today's news seems to have eased some of the anxiety that surfaced when earnings news sent shares tumbling 14.2 percent on Jan 28.

Brocade (NASDAQ:BRCD) is trading down 20 cents to $5.63 after Bernstein cut the stock to Market Perform from Outperform. The reaction in the options market is interesting. While put volume rose to about 48,000 contracts, and 13X the normal, most of the action has been on the bid. The top trade is 2003 July 6 puts on the bidding price of 69 cents. 29.3K now traded (56% Bid / 27% Mid). Another 10.6K May 6 puts traded (56% Bid / 24% Mid). Implied volatility eased about 3 percent to 41.5, which is also consistent with premium selling. So, some investors might be taking advantage of today's weakness to sell $6 May and July puts on the chipmaker.

Bearish Flow

SPYders (NYSEARCA:SPY) climbs 68 cents to $117.52 and just after the opening bell, the Sep 91 – 100 – 105 – 115 condor trades 20000X on ISE. Looks like $1.91 was paid and financed by selling 20000 June 125 calls at $2.34 each, pocketing a net 43 cents on the spread and possibly looking for SPY to settle between $105 and $115 per share at the September expiration.

Implied Volatility Movers

Range Resources (NYSE:RRC) adds 13 cents to $47.54 and implied volatility is higher amid BP-for-RRC chatter — Briefing. 7830 calls already traded vs. just 9 puts. Trading is brisk in April 45, 47.5, 50, and 52.5s. Implied volatility rose 4.5 percent to about 37.

Unusual Volume Movers

BofA (NYSE:BAC) options volume is running 2X the usual, with 597,000 contracts traded and call activity representing about 74 percent of the activity.

Amazon.com (NASDAQ:AMZN) options activity is running 2X the usual, with 136,000 contracts traded and call volume representing 63 percent of the volume.

Oracle (NASDAQ:ORCL) options volume is running 2X the usual, with 110,000 traded and call volume representing 64 percent of the activity.

Unusual volume is also being seen in Brocade (BRCX), Boston Scientific (NYSE:BSX), and Best Buy (BBY).