Thursday Options Recap

Includes: BAC, LVS, MCOX, MSFT
by: Frederic Ruffy


Stocks are broadly higher for a second day. The table was set for morning gains on Wall Street after Europe’s equity markets rallied for a second consecutive session. Spain’s IBEX once again led the advance with a gain of 2.8 percent. Meanwhile, the euro steadied and, in the US, attention turned to a round of mostly upbeat same store sales numbers from retailers released Thursday morning. The latest weekly jobless claims disappointed, yet the Dow Jones Industrial Average was able to move solidly higher through midday. Financials helped after Goldman Sachs published a bullish note on the banks. The builders rallied around data that showed a 10.4 percent increase in October pending homes sales. The Dow Jones Industrial Average is up 100 points and has rallied 350 points over the past two days. The NASDAQ added 27. The CBOE Volatility Index (.VIX) slipped another 1.71 to 19.65. Trading is active, with about 8.8 million calls and 5.8 million puts traded so far.

Bullish Flow

Microsoft (NASDAQ:MSFT) adds 73 cents to $26.77 and options volume is 2.5X the average daily, with 190K calls and 65K puts traded on the software maker. The action includes a Jan 27.5 straddle bought at $2, 7000X and tied to stock at $36.75 (22 delta). Another noteworthy trade is a Dec 26 - Feb 28 (1x2) call ratio spread, 7430X at 48 cents and is probably rolling -- selling-to-close 7430 Dec 26 calls at 94 cents to buy-to-open twice as many (14860) Feb 28 calls at 71 cents each. The second biggest traded of the day is a block of 10000 Dec 27 calls on the 39-cent bid on the ISE and probably a closing trade. Implied volatility in Microsoft is up about 1 percent to 23 today.

BofA (NYSE:BAC) adds 40 cents to $11.69 and the Jan 12.5 – 14 call spread is bought at 23 cents, 10700X on PHLX. Looks like the same spread that was bought at 16 cents, 44900X yesterday (see 12/1 color). More than 200,000 BAC Jan 12.5 calls traded Wednesday and open interest increased by 111,000. The Feb 12 – 14 call spread is seeing interest today as well, apparently bought at 46 cents, 10000X.

Bearish Flow

Las Vegas Sands (NYSE:LVS) has come under fire on increasing volume after the Macau government shot down the casino operator’s request for land concessions on Cotai. LVS hit a low of $47.2 on the news and is down $2.57 to $48.77. Options volume includes 107000 calls and 64000 puts. Trading is brisk in the Weekly calls that expire 11/3. 50s and 52.5s are the most actives. Dec 50 and 52.5 calls are seeing brisk trading as well. The Weekly 47 and Dec 49s are the most actively traded puts. Implied volatility is up 9 percent to 58.

Implied Volatility Mover

Mecox Lane (NASDAQ:MCOX), which was slammed for a two-day loss of 51.8 percent prior to today, is up 92 cents to $7.57. Shares sank beginning Tuesday after the Chinese online retailer reported better-than-expected earnings, but weaker margins on rising costs. Investors pummeled the stock, but it’s rebounding a bit today. Meanwhile, options volume is 8X the average daily, led by a seller of 3000 Jan $10 calls at 30 cents each. It might close (a position opened Tuesday at 75 cents). 3078 now traded vs. 3134 in open interest.