Friday Options Recap

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 |  Includes: AIG.PA, ALL, ANRZQ, BG, CMA, EAT, GNW, PHM, PRU, SPY
by: Frederic Ruffy

Sentiment

Stocks slumped on disappointing jobs data Friday morning and the tone of trading has remained cautious throughout the session. Stock index futures were under pressure before the exchanges opened after the Labor Department said the US economy lost another 131,000 jobs in July, which was considerably worse than the 87,000 decline that economists had predicted. Making things worse, June numbers were revised down to show a loss of 221,000, from an initial reading of –125,000. The unemployment rate held unchanged at 9.5 percent and hourly earnings rose .2 percent. Economists were expecting an unemployment rate of 9.6 percent and a .1 percent increase in hourly earnings. Nevertheless, the focus was on the headline number and, with not much other news to guide trading, the Dow Jones Industrial Average faltered on the disappointing jobs data. With an hour left to trade, the Dow is off 80 points, but 79 points above session lows. The CBOE Volatility Index (.VIX) hit a high of 23.89 and was recently up .27 to 22.37. The tone of trading has become much more defensive, with about 5.1 million puts and 4.8 million calls traded so far.

Bullish Flow

Pulte Homes (NYSE:PHM) is up a penny to $8.57 and has added 2.3 percent since the homebuilder reported earnings two days ago. Calls are active Friday, with one block of 4,800 Jan-12 calls at the 12.5 strike traded at 90 cents when bid-ask spread was 76 to 90 cents. Looks like an opening buyer. 5,000 contracts now traded. Jan 10 and 11 calls have traded 628 and 260X, respectively, also at the ask.

From Henry Schwartz: A trader hungry for upside paid 15 cents for a total of 1500 Brinker (NYSE:EAT) Aug 17.5 calls this morning to open a new position, as shares were trading near $15.72, down 21cents on the day. Shares of the restaurant franchiser touched a 52wk high of $21.12 on April 15th, but shed nearly 25% over the following two months, bottoming out near $14 on July 1. Recently we’ve seen volume pick up in the Jan 17.5-22.5 call spread, trading in the 95cent range in July.

Bearish Flow

Eight of today’s top 10 most actively traded options early Friday are puts on the SPYders (NYSEARCA:SPY). Shares are off 36 cents to $112.49 on disappointing monthly jobs data (-131K vs. -87K consensus). The most actives are SPY Aug, Sep and Oct puts. The activity includes a four-way spread, after an investor apparently sold 21700 Aug 100 – 107 put spreads at 32 cents to buy the same number of Oct 101 – 110 put spreads at $2.10. It likely rolls a hedge from August to October, two weeks before the August options come off the board.

Implied Volatility Mover

Genworth (NYSE:GNW) loses another 40 cents to $12.84 and is now down 18.7 percent since delivering disappointing earnings on July 29. A noteworthy options trade in the name Friday is a seller of 20K Aug 13 calls at 49 cents, delta neutral. 3000 were canceled. So, total volume is now 18.5K vs. 4.9K in open interest. Implied volatility is up about 6 percent to 50.

Unusual Options Movers

Bullish flow detected in Prudential Financial (NYSE:PRU), with 8846 calls trading, or 4x the recent avg daily call volume in the name.

Bullish flow detected in Bunge (NYSE:BG), with 8342 calls trading, or 4x the recent avg daily call volume in the name.

Bullish flow detected in Alpha Natural Resources (ANR), with 5972 calls trading, or 2x the recent avg daily call volume in the name.

Increasing options volume is also being seen in Allstate (NYSE:ALL), Comerica (NYSE:CMA), and AIG (NYSE:AIG).