Wednesday Options Recap

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 |  Includes: BAC, JASO, KSS, MGM, MU, NYT, SVNTQ, SYMC, SYNA
by: Frederic Ruffy

Sentiment

Major averages are holding modest gains on another slow news day Wednesday. With no economic news to guide the action, focus remained on Europe’s banks and investors seemed to find solace in the fact that Portugal had a successful offering of 10-year bonds. European benchmarks moved higher and that set a positive tone of trading in the US. Later in the day, the Fed’s latest Beige Book was released and the qualitative assessment of the economy indicated widespread slowing of economic activity, which was not a surprise. However, investors did seem to respond favorably to tax and stimulus initiatives unveiled by the Obama administration Tuesday afternoon. Heading into the close, the Dow Jones Industrial Average has recaptured 60 of yesterday’s 107-point loss. The CBOE Volatility Index (.VIX) is down .60 to 23.20. Trading in the options market is running about the typical levels, with 6.05 million calls and 4.8 million puts traded so far.

Bullish Flow

Bullish flow detected in Micron Technology (NASDAQ:MU), with 28216 calls trading, or 2x the recent avg daily call volume in the name. Shares are off 17 cents to $6.58 and top trade is a block of 17,500 April 9 calls at 42 cents on ISE, which is an opening buyer, according to ISEE data. In fact, data shows that 25K calls have been bought to open on the chipmaker so far today. April 9s are most actives, with 25K traded. Implied volatility is up 4 percent to 55. No news on the stock. Shares are down about 42 percent since April 14 and today’s call buyers might be anticipating a recovery over the next two quarters.

Impressive trade in BofA (NYSE:BAC) after one strategist paid a dime per contract for 100000 Sep 14 call options. Shares are up 22 cents to $13.43 and these calls are 4.2 percent out-of-the-money with 9 days of life remaining. While open interest is 120K, this is likely an opening trade because the open interest in the contract has been building over time. In other words, there have been no other 100K contract days in the contract and so this is probably not a liquidating trade. It was tied to stock (20 delta.)

Bearish Flow

Bearish activity detected in Kohl's (NYSE:KSS), with 8746 puts trading, or 4x the recent avg daily put volume in the name. Shares are down 20 cents to $48.86 and the Oct 49 put is the most active. 4,460 traded (96 percent Ask) vs. 2,492 in open interest. Looks like opening buyers in Sep 50 puts as well. Implied volatility is 3 percent to 32. No recent news on the retailer.

Implied Volatility Mover

Savient Pharmaceuticals (SVNT) implied volatility is elevated and trading seems somewhat defensive today ahead of a Sep 14 PDUFA date for KRYSTEXXA, a treatment for chronic gout. Shares are off 34 cents to $14.37 and a block of 2325 Oct 10 puts at 80 cents is possibly an opening buyer. Separately, the Sep 9 – 15 put spread trades at $1.64, 1000X. Implied volatility is up about 2 percent to 125.

Unusual Volume Movers

Bearish activity detected in Synaptics (NASDAQ:SYNA), with 5231 puts trading, or 4x the recent avg daily put volume in the name.

Bullish flow detected in Micron Technology (MU), with 28216 calls trading, or 2x the recent avg daily call volume in the name.

Bullish flow detected in MGM Resorts International (NYSE:MGM), with 41241 calls trading, or 4x the recent avg daily call volume in the name.

Increasing options volume is also being seen in Symantec (NASDAQ:SYMC), New York Times (NYSE:NYT), and JA Solar (NASDAQ:JASO).