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Sentiment

Stocks are trading mixed following disappointing jobs data Wednesday. After a 194-point rally Tuesday, the Dow Jones Industrial Average opened lower after ADP reported that the US economy lost 39,000 private sector jobs in September. Economists were looking for an increase of 18,000 and the news comes two days before the Labor Department’s key jobs numbers. Economists expect the report to show an increase of 74,000 payrolls and the unemployment rate ticking up to 9.7 percent from 9.6 percent. The tone of trading might remain cautious ahead of the data and heading into the earnings-reporting season, which unofficially kicks off with a report from Alcoa (NYSE:AA) Thursday afternoon. AA is one of 15 Dow stocks moving higher late Wednesday and the industrial average is flat. The tech-heavy NASDAQ is down 24. With an hour left to trade, the CBOE Volatility Index ((.VIX)) is down .04 to 21.72. Options volume is respectable, with 6.7 million calls and 5.5 million puts traded thus far.

Bullish Flow

Intel (NASDAQ:INTC) with relative strength and interesting options action Wednesday. Shares are up a nickel to $19.19, even as the tech-heavy NASDAQ suffers a 27-point loss through midday. Meanwhile, today’s most actively traded options contract is Intel’s Oct 20 call option, which has traded 99,000X. The top trade is 27,000 contracts at 15 cents on ISE, which appears to be an opening buyer, based on ISEE sentiment data. Implied volatility is up 7 percent to 30 and some players might be taking positions in anticipation of Intel’s earnings, due Oct 12 after market.

Bearish Flow

AT&T (NYSE:T) is down 66 cents to $28.28, now the biggest loser in the Dow Jones Industrial Average, and falling to session lows on news Verizon (NYSE:VZ) will begin offering Apple iPhones beginning early 2011. AT&T shares saw a slide on increasing volume on the news and options activity is now running 2.5X the average daily, with 39K calls and 56K puts traded so far. Oct 29 puts are the most actives. Verizon, meanwhile, is up 36 cents to $33.44 and options volume is 3.5X the average daily, with 59K calls and 32K puts traded. Nov 33 and Oct 34 calls are the most actives.

Implied Volatility Mover

Bearish activity detected in Rackspace Hosting (NYSE:RAX), with 5520 puts trading, or 4x the recent avg daily put volume in the name. Shares are down $2.56 to $23.56 after competitor Equinix (NASDAQ:EQIX) issued a revenue warning, sending shares of the Foster City, CA data storage company skidding for a 30 percent loss. In RAX, the top options trade is a lot of 253 Oct 25 puts at the $1.30 asking price. 1661 now traded (96 percent ask). Buyers appear to be dominating the action in Oct 24 and Dec 25 puts as well. Implied volatility is up 11.5 percent to 59.

Source: Wednesday Options Recap