Friday Options Recap

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 |  Includes: AAL, AIG, CNQ, GSG, GSK, INTC, MGM, NSC, QQQ, SVU
by: Frederic Ruffy

Sentiment

Stocks slumped on mixed jobs data and renewed worries about European debt problems Friday. Market action was sluggish early after the Labor Department reported that the U.S. economy added 103,000 jobs in December, which was considerably less than the 150,000 increase that economists had expected. However, November numbers were revised up and the unemployment rate fell to 9.4 percent from 9.8 percent. Economists were looking for a decline to 9.7 percent. However, after steady trading at the open, the major averages followed the euro lower through midday. The European currency dipped below 1.28 against the buck after rising yields of Portuguese bonds rekindled worries about the debt crisis. The decline was orderly, however, and the situation had stabilized heading into the final hour. The Dow Jones Industrial Average is down 35 points and 62 points off session lows (11,600). The NASDAQ lost 12. The CBOE Volatility Index (.VIX) is flat at 17.40. Trading in the options market remains active. 8.8 million calls and 7.6 million puts traded so far.

Bullish Flow

Big print in Intel (NASDAQ:INTC) after an investor buys 32,700 Jan 21 calls at 30 cents each. 119K traded vs. 105K in open interest. Shares are off 14 cents to $20.63 and today’s call buyers might have their sights set on earnings, due Jan 13 (after market). Shares fell 2.7 percent after earnings were last reported on 10/13, but are up 7.2 percent since that time (down 5.8 percent since 12/10).

Human Genome Sciences (HGSI) sees a morning spike and is trading up 44 cents to $25.26 on news the company’s CEO bought 60K shares at $24.16 on Jan 5. The purchase comes ahead of a presentation at an annual confab conference Jan 10 – 13. Meanwhilie, 9,810 calls and 660 puts traded in HGSI. Jan 26 calls are the most actives. 2527 traded (72 percent ask), Jan 25 and 27 calls are seeing interest as well. Implied volatility is up to 40 from 37 yesterday. The company is still awaiting a final FDA decision regarding its Benlysta lupus drug. It was recently postponed to March from late-December.

Bearish Flow

Supervalu (NYSE:SVU) is falling to session lows in volatile trading Friday morning. Shares are off 54 cents to $8.66 and recent trades include lots of Jan 7.5 puts at the 15-cent ask price. 15,400 now traded. The action comes after the company announced the departure of a Chain Services COO and after Susquehanna cut their price target on the stock this morning.

Implied Volatility Mover

Norfolk Southern (NYSE:NSC) with relative strength and increasing call activity Friday. Shares notched a new 52-week high and are up $1.05 to $64.85. 11,000 calls and 2,000 puts traded on the railroad operator. The action includes a multi-exchange sweep of 7445 Mar 70 calls at 80 cents when the market was 70 to 80 cents. 7,984 traded vs. 1,145 in open interest. Feb 65 calls are seeing interest as well and night be closing trades after today’s run higher. Implied volatility is up 4.5 percent to 24.5, with earnings slated for Jan 25 (after market).

Unusual Volume Movers

Bearish activity detected in PowerShares QQQ (QQQQ), with 521,951 puts trading, or 3x the recent average daily put volume in the name.

Bullish flow detected in Canadian Natural Resources (NYSE:CNQ), with 29047 calls trading, or 21x the recent average daily call volume in the name.

Bearish activity detected in iShares GSCI Commodity Indexed Trust (NYSEARCA:GSG), with 5812 puts trading, or 224x the recent average daily put volume in the name.

Increasing volume was also seen in AMR, MGM and AIG.