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Sentiment

Major averages fell early amid ongoing concerns about the European Debt Crisis, but had pared losses by late-Monday. The table was set for morning weakness on Wall Street after stock benchmarks fell more than 2 percent across Europe’s major markets. Meanwhile, the euro touched two-month lows on worries about spreading debt problems in Eurozone countries. The Dow Jones Industrial Average fell more than 160 points in morning trading. However, the decline was orderly and the situation had stabilized by midday. A modest round of buying interest surfaced late and the financials paced the afternoon advance. American Express (AXP), JP Morgan (JPM) and BofA (BAC) helped lift the Dow Jones Industrial Average, which is down 40 points. The NASDAQ is off 9.5 and up nearly 30 points from session lows. The CBOE Volatility Index hit a high of 23.84, but was recently down .50 to 21.72. Trading is kind of slow. About 5.5 million calls and 5.3 million puts traded so far.

Bullish Flow

14000 calls and 5640 puts traded on FedEx (FDX) so far today. Shares are up $3.24 to $90.74 after Credit Suisse upgraded the stock to Outperform from Neutral. Dec 90 calls have traded 6157X and 65 percent trading at the ask. Dec 95 and 100 calls are seeing interest as well. Earnings also come into play before the expiration. FDX is due to report Dec 16, before market, and the day before expiration Friday. Implied volatility is flat at 29.

Sprint (S) loses 3 cents to $3.90 and 13,680 Dec 4 calls have changed hands. The top trade is 3000 at 17 cents on ISE and an opening customer buyer, according to ISEE data. 10000 Sprint calls have been bought-to-open so far on ISE. Implied volatility is up 12 percent to 56. Sprint shares fell nearly 10 percent on disappointing earnings on 10/27 and are down an additional 9.3 percent since that time.

Bearish Flow

Verisign (VRSN) loses $1.03 to $34.26 and more than 8000 puts traded on the software maker. The volume represents 7X the norm and compares to call volume of 500 contracts. March 29s are the most actives. 2144 traded (87 percent ask) vs. 740 in open interest. Looks like opening buyers of Mar 30, 31, 32 and 34 puts as well. Implied volatility is up 12 percent to 28.5. Shares gained 3.4 percent after the company reported earnings on 10/28, but have been trading mostly sideways in a narrow range since that time. Not much news since.

Implied Volatility Mover

Theravance (THRX) notched a new 52-week high and is up $1.65 to $24.50 on news Glaxo has lifted its stake in the biotech to 19 percent. The move signals “confidence in a key new respiratory drug being developed with the company”, Reuters. THRX is rallying on the news and one player pays $2.55 for Dec 22.5 calls, 1475X. 2375 calls and 105 puts now traded in THRX, or 15X typical volume. Implied volatility is up 25 percent to 55.

Source: Monday Options Recap