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Sentiment

Stocks rallied around better-than-expected jobs numbers and are holding gains late Friday. The table was set for the morning advance after the Labor Department reported that the US economy lost 54,000 jobs in August. Economists were looking for a decline of 120,000. In addition, July numbers were revised to show a loss of 54,000 and much better than the -131,000 initially reported. Average hourly earnings rose .3 percent and three times better than expectations. The unemployment rate edged up to 9.6 percent from 9.5 percent, which was in-line with expectations. The Dow Jones Industrial Average rallied on the data early and has been trading in a range since that time. With an hour left to trade, the Dow is up 93 points and the NASDAQ added 25. Trading in the options market has been active, but is slowing ahead of the three-day Labor Day weekend. About 5.8 million calls and 5 million puts traded so far.

Bullish Flow

Ford Motor (NYSE:F) adds 24 cents to $11.96, now up 5.7 percent month-to-date, after reporting an 11 percent decline in August sales on Sep 1. Options action is picking up today, with 25K calls and 9,930 puts traded on the automaker, or two times the typical volume for the first hour of trading. Early trades included blocks of Sep 14 calls at 7 cents on ISE, where sentiment data hints at opening customer buy orders. 10,775 contracts now traded.

Urban Outfitters (NASDAQ:URBN) adds 42 cents to $33 and options volume is 3X the average daily, led by a Sep 33 – 34 call spread, 3300X on ISE. Looks like it was sold at 45 cents and is possibly rolling up in strikes after a three-day 8.7 percent gain in the share price. URBN saw relative strength and was one of the best gainers in the NASDAQ 100 yesterday. The company is due to present at a Goldman Sachs Retailing Conference on 9/14.

Bearish Flow

Sprint Nextel (NYSE:S) shares are up a nickel to $4.39 and have now added 12.5 percent since Monday. Some players might be worried that the gains won’t last, as a block of 20K Sep 4 puts recently traded at the 4-cent ask price. It might be a closing trade. Meanwhile, 8,000 Jan 4 puts also changed hands, including 4000 at the 38-cent ask and 4,000 at 37 cents. The Jan 4 puts look opening and marked “tied”, so possibly a protective put or volatility play. Implied volatility in Sprint is down 4 percent to 48.5 today, compared to a 52-week high and low of 87 and 46.5.

Implied Volatility Mover

The top options trades so far today are in the CBOE Volatility Index (.VIX) after the Sep – Oct 25 put spread trades at 45 cents, 58000X. The same spread traded yesterday and the action looks like rolling from one month to the next. Open interest in the Oct 25 puts increased by 54,880 to 129,900 following yesterday action and if today’s block of 58K adds to it, then the increasing interest is likely to make the contract the second biggest position in the VIX; behind the Sep 25 puts, which have 289K of open interest. VIX is down 1.33 to 21.86 today and has now suffered a four-day slide of about 20 percent. The large blocks of puts on the VIX might be hedges of VIX futures.

Unusual Volume Movers

Bullish flow detected in Tyson Foods (NYSE:TSN), with 10417 calls trading, or 11x the recent avg daily call volume in the name.

Bullish flow detected in TD Amertrade (NYSE:AMTD), with 4,536 calls trading, or 7x the typical volume in the name.

Bullish flow detected in Riverbed Tech (NASDAQ:RVBD), with 6,922 calls trading, or 4x the typical volume in the name.

Increasing options action is also being seen in Hot Topic (NASDAQ:HOTT), Goldman Sachs (NYSE:GS), and Petrobras (NYSE:PBR).

Source: Friday Options Recap