Thursday Options Recap

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Includes: APC, BIDU, BP, GS, HAL, HPQ, PALM, RIG, UNG
by: Frederic Ruffy

Sentiment

Major averages opened higher on in-line weekly jobless claims numbers and have been able to extend early gains on hopes for financial aid packages to Greece. Stock index futures ticked higher early Thursday after the Labor Department said that jobless claims fell by 11,000 last week to 448,000, which was not far from the 445,000 that economists had expected. Meanwhile, European equity markets and the euro moved higher after European Union Commissioner for Economic and Monetary Affairs Olli Rehn said he's confident that a financial aid package to debt-riddled Greece will be available in coming days. The Dow moved up early and was able to extend the advance through midday. With about an hour left to trade, the industrial average is up 130 points and the NASDAQ added 37. Trading in the options market is a bit lighter than in recent sessions, with 7 million calls and 5.4 million puts traded so far.

Bullish Flow

Goldman Sachs (NYSE:GS) is up $2.67 to $159.68 on reports the firm will settle its fraud case with the SEC. In the options market, the top trades of the day include a seller of 9,500 May 170 calls and also bought 9,500 June 165 – 175 call spreads. They paid a $1.64 net debit for the three-way and might be looking for GS to hold below $170 through the May expiration (22 days) and then rally thereafter. It might also be a closing trade or a roll.

Bearish Flow

Hewlett Packard (NYSE:HPQ) shares are down 43 cents to $52.85, as investors show lukewarm enthusiasm for the computer maker's move to buy Palm (PALM) for $1.4 billion. Similarly, Nov 70 calls are seeing interest, with one player unloading 63000 contracts at 24 cents each. Total volume is 72,438 and the activity appears to be liquidating trades. Open interest is 74.3K. On April 15, open interest in the contract increased after more than 20K were bought at 31 cents.

Bearish activity seen in Anadarko Pete (NYSE:APC), as shares display relative weakness. APC is off $1.58 to $68.62, falling to session lows on increasing volume. About 4,000 puts traded, or 2X recent average daily. May 70s are most actives. 2265 traded (79% Ask). Another 1085 May 65s (96% Ask). No headlines to explain the bearish action in the oil driller. Crude oil is up $1.89 to $85.11.

Implied Volatility Movers

CBOE Volatility Index (.VIX) is down 2.47 to 18.61 and session lows, as the S&P 500 rallies 16 points on news of EU pledges of financial aid to Greece. VIX has now retraced 78.7 percent of the 5.34-point spike Tuesday, which was motivated in part by S&P downgrades of Greece and Portugal. In VIX options, the top trade of the day is a buyer of 70K May 18 puts at 80 cents, perhaps an investor looking for VIX to continue its slide over the next 19 days.

Unusual Volume Movers

BP (NYSE:BP) options volume is running 14X the usual, with 221,000 contracts traded and call activity representing about 54 percent of the activity.

US Natural Gas Fund (NYSEARCA:UNG) options activity is running 2X the usual, with 216,000 contracts traded and call volume representing 71 percent of the volume.

Halliburton (NYSE:HAL) options volume is running 8X the usual, with 213,000 traded and put volume representing 58 percent of the activity.

Unusual volume is also being seen in PALM, Transocean (NYSE:RIG), and Baidu.com (NASDAQ:BIDU).