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Sentiment

Stocks are trading mixed on another slow news day and as investors wait for the third quarter earnings-reporting season to get into full swing. Intel (INTC) is due to report after market. JP Morgan releases results tomorrow morning. There have been no significant earnings reports to guide today’s action, however. The economic calendar is light as well. The release of the minutes from the latest Federal Reserve meeting caught some attention Tuesday afternoon, but since officials basically rehashed the same concerns, the news failed to stir up much activity in the equity market. With about an hour left to trade, the Dow Jones Industrial Average is flat. The NASDAQ has added 10.7 thanks to gains in some of the large caps like Apple (AAPL) and Google (GOOG). The CBOE Volatility Index (.VIX) lost another .10 to 18.86. Trading in the options market is brisk, with about 7.7 million calls and 5.6 million puts traded so far.

Bullish Flow

DELL sees a spike on increasing volume about 30 minutes ago and is up 21 cents to $13.94 on a Fox Biz report that Chief Executive Michael Dell might bid for his company. Maverick Capital Hedge Fund Manager Lee Ainslie apparently made the comments at a speech at the Value Investing Congress in New York. Ainslie added that Dell might pay a large special dividend instead. Shares saw a spike and action is picking up in Oct 14 calls, with 20395 traded (56 percent ask). Oct 15, Nov 14, Nov 15, Nov 16, Feb 15 and Feb 15 calls are seeing interest as well.

Starbucks (SBUX) shares are up 83 cents to $26.82 and 16,000 calls traded in the name so far, which is 45X the typical volume and compares to 810 puts. The action is scattered across Oct, Nov and Jan 26, 27, and 28 calls. Credit Suisse is out with positive comments today, saying margins might surprise to the upside. SBUX is due to release results early-Nov. Implied volatility is down 3 percent to 32.

Bearish Flow

Gamestop (GME) loses 81 cents to $19.57 and 23,160 puts traded in the name, or 18X the recent average daily volume. The weakness in shares and increasing put activity comes after the Dallas Morning News published a story that a recent court decision could give video game makers like Take Two and Electronic Arts the ability to prevent GameStop from selling used video games. The options activity in GME is focused on Oct and Nov puts with strike prices ranging from 15 to 21 and seems to include some closing trades. For example, Oct 15 puts are the most actives. 10275 traded at a penny. Meanwhile, implied volatility in GME is up 16 percent to 42.5.

Implied Volatility Mover

Urban Outfitters (URBN) touched a new 52-week low of $30.08 after UBS cut its price target on the stock to $41 from $45. Shares have rebounded and are up 13 cents to $30.95, but directional options order flow is decidedly bearish. Approximately 10,000 puts and 2,000 calls traded on the retailer so far. Implied volatility is up about 5 percent to 43.5.

Source: Tuesday Options Recap