Thursday Options Recap

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 |  Includes: APC, BRCD, ESV, GCI, JOSB, ME, MNTA, PAR, RDC
by: Frederic Ruffy

Sentiment

Major averages are holding modest gains ahead of employment numbers Friday morning. Economic data drove the morning action after the Labor Department said that filings for jobless benefits fell by 6,000 last week and a bit more than economists had expected. Separate data, on second quarter productivity and July factory orders, was in-line with expectations. However, the latest pending home sales showed a surprise increase of 5.3 percent in July. Economists were looking for no change. After a 255-point rally Wednesday, the data was enough to keep the bullish momentum alive and now the Dow Jones Industrial Average is up 20 points heading into the final hour. Trading is slow, with about 4.7 million calls and 3.9 million puts traded. Volume will pick up early Friday in reaction to the jobs data, and then slow to a crawl tomorrow afternoon heading into the three-day Labor Day weekend.

Bullish Flow

Bullish flow detected in Anadarko Petroleum (NYSE:APC), with 23,850 calls trading, or 2x the recent average daily call volume in the name. Shares are up $1.81 to $50.50 after The Australian published a story saying that APC is on BHP’s (NYSE:BHP) radar screen as a possible acquisition target: "A senior figure in the global energy industry is convinced that the 'second target' for BHP is Anadarko Petroleum Corporation, telling The Australian he believed the US oil and gas independent was firmly on BHP’s radar. BHP declined to comment for this article." In options action, the focus is on APC Sep 50, 52.5 and 55 calls. Nov 55 calls are among the most actives as well.

Bearish Flow

Momenta Pharmaceuticals (NASDAQ:MNTA) loses 14 cents to $14.76 and one strategist pays 25 cents for the Jan 10 – 12.5 (2X1) put ratio spread, 4000X on PHLX. Looks like a new position and might be a hedge. Implied volatility is flat today, but elevated at 92.

Implied Volatility Mover

Mariner Energy (ME) shares sank in volatile morning trading on reports of an explosion on one the company’s oil rigs in the Gulf of Mexico. ME sank to $19.62 and were recently down $1.04 to $22.31, and 13.7 percent off session lows. Meanwhile, options volume is running 145X the average daily, with about 23,000 puts and 3,190 calls traded. The top trade is a lot of 456 Sep 20 puts at 80 cents. It traded at 11:45 and thirty minutes after the news broke. 15.4K now traded and the contract is now bid at 40 cents. CNBC reports that no oil spilled as a result of the explosion and Dahlman Rose analysts say the explosion is likely a platform. Consequently, the fallout is likely to be considerably smaller. Still, implied volatility in the Houston-based oil driller is up sharply, almost 200 percent to 76.5.

Unusual Volume Movers

Bearish activity detected in Ensco (NYSE:ESV), with 5456 puts trading, or 5x the recent average daily put volume in the name.

Bearish activity detected in Rowan Companies (NYSE:RDC), with 2118 puts trading, or 3x the recent average daily put volume in the name.

Bearish activity detected in Joseph A Bank (NASDAQ:JOSB), with 2954 puts trading, or 5x the recent average daily put volume in the name.

Increasing volume is also being seen in 3Par (NYSE:PAR), Gannett (NYSE:GCI), and Brocade (NASDAQ:BRCD).