Monday Options Recap

|
 |  Includes: BHP, CLDA, JCP, MCD, MNTA
by: Frederic Ruffy

Sentiment

Stocks are broadly higher on a relatively light news day Monday. With no economic data on the calendar, the focus is primarily on the day’s stock news. McDonald’s (NYSE:MCD) edged higher and is one of 24 Dow stocks in positive territory after the fast food chain reported earnings that matched Wall Street estimates. JC Penney (NYSE:JCP) gained 7 percent after announcing that it was slashing jobs to cut costs. Trading across other markets is orderly. Treasurys are little changed heading into a two-day FOMC meeting that begins tomorrow. Gold lost $4.6 to $1,336.40 an ounce and crude oil slipped another $1.43 to $87.68 a barrel. Meanwhile, Alcoa (NYSE:AA) gained 3.6 percent amid strength in the cyclicals and is the best gainer in the Dow Jones Industrial Average. The Dow has added 89 point on the session. The tech-heavy NASDAQ gained 28. With less than an hour to trade, the CBOE Volatility Index (.VIX) gave up .84 to 17.63. Trading in the options market remains busy, with 7.6 million calls and 5.7 million puts traded so far.

Bullish Flow

AMD, which lost 6 percent on earnings news Friday, has recaptured four cents to $7.58. Options volume in the chipmaker through midday is focused on February 8 calls. 31,694 traded, including several blocks at 19 cents on ISE, which are opening customer buyers, according to ISEE data.

Momenta Pharmaceuticals (NASDAQ:MNTA) has some momentum today, gaining 90 cents to $16.05 and heading to session highs. Options volume includes 9,480 calls and 1,210 puts. Most of the action is in Feb calls with strikes ranging from 15 to 20. Implied volatility is elevated around 116 (-2.5 percent) and overall flow seems bullish, possibly in anticipation of earnings, due around Feb 10.

Bearish Flow

Steve Smith notes for WhatsTrading.com today that: Billiton (NYSE:BHP) shares are up $140 to $89.60 and option volume is running 2.5x the daily average being driven by volume in the August $75 put and $100 call as each has traded 3,800 contracts in what looks like opening bearish risk/reversal (sold calls and bought puts) for 5c debit. The company has been on the prowl for acquisitions since its bid for Potash was rejected but has also promised to deliver a dividend payment to shareholders. This may be being done against stock or as a preemptive placeholder of an arbitrage position. The company is slated to report earnings 2/16.

Implied Volatility Mover

Clinical Data (NASDAQ:CLDA) gapped up, to a high of $25.35, and is $8.37 higher to $23.40 after the FDA approved the company’s anti-depressant drug. Options are actively traded as well and includes a block of 3,432 Mar 30 calls at 90 cents when the market was 60 to 75 cents. Another block of 2,958 Feb 25 calls traded at $1.25, which was also above the $1.10 asking price. Beyond that, CLDA options are seeing mixed trading, but predominantly on the call side of the options chain. 24000 calls and 2260 puts in the first 20 minutes. Implied vols down 67 percent to 67.