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Sentiment

Major averages are modestly higher with help from positive economic numbers Friday. After Asia’s markets rallied around better-than-expected Chinese manufacturing numbers Friday, the focus in the US turned to a report on personal incomes and spending early Friday. It showed increases of .5 percent incomes and .4 percent in spending for August. Economists were looking for .3 percent increases in both. A separate report released later showed the UofMichigan index of consumer sentiment index up to 68.2 at the end of September, which was better than the initial reading of 66.6 and also ahead of expectations (of 67.0) A third report showed construction spending up .4 percent in August, and much better than the -.5 percent that was expected. Meanwhile, the latest ISM Index fell to 54.4 in September, down from 56.3 in August and below expectations of 54.8. In the end, the overall economic news seemed supportive of higher stock prices and, after a bit of weakness through midday, the Dow Jones Industrial Average is up 53 points. The NASDAQ added 5. With 40 minutes left to trade, the CBOE Volatility Index (.VIX) is down 1.22 to 22.48. Trading is slowing. With about 6 million calls and 4.1 million puts traded so far.

Bullish Flow

Humana (HUM) options volume is 7X the average daily Friday after the company announced that it is teaming up with Wal-mart (WMT) to offer a Medicare prescription drug plan that will have have the lowest premiums in the US. The Humana Walmart Preferred RX Plan will cost $14.80 per month — Reuters. Shares saw a spike to $50.75 in morning trading on the news, but the rally fizzled and HUM is off a dime to $50.14. About 7,430 calls and 3,430 puts traded in the name. The biggest is a block of 2950 Oct 52.5 calls at 40 cents, which might be an opening buyer looking for additional strength in Humana shares over the next two weeks (traded mid-market). Implied volatility is up about 3 percent to 32.

Powershares Bulls Dollar Index Fund (UUP) loses 18 cents to $22.66 and bullish flow is detected after 32,620 calls traded on the exchange-traded fund, or 5X the recent average daily call volume. One block of 20,000 January 24 calls at the 22-cent ask price looks like buyer. 28.5K now traded vs. 106.4K in open interest, currently the largest position in UUP. The fund tracks the performance of the tracks the dollar against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc. Buying calls on the fund is a bullish bet on the buck.

Bearish Flow

iShares Brazil Fund (EWZ) is up 1.4 percent to $78.05 this morning. A noteworthy options trade yesterday was a buyer of 19,600 Oct 74 puts at 88 cents per contract. 24,600 traded and open interest increased by 22,968 to 31,528. The put buying might be hedging activity ahead of the October 3 Brazilian general elections.

Implied Volatility Mover

The top options trades so far today are in Nucur (NU) after one strategist pays 87 cents for the Oct – Nov 40 call spread, 25000X. 33,324 October 40 calls now traded vs. 31,256 in open interest. November 40 calls traded 31,747 vs. 3,152 in open interest. Implied volatility in the steelmaker is up 7 percent to 32.

Unusual Volume Movers

Bullish flow detected in Compellent Technologies (CML), with 5873 calls trading, or 4x the recent avg daily call volume in the name.

Bullish flow detected in Lexmark International Group (LXK), with 8413 calls trading, or 7x the recent avg daily call volume in the name.

Bullish flow detected in InterDigital (IDCC), with 4879 calls trading, or 4x the recent avg daily call volume in the name.

Increasing volume is also being seen in Foot Locker (FL), Bunge (BG), and Alcatel Lucent (ALU)

Source: Friday Options Recap