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Sentiment

Today’s options recap is really a midday update due to travel. Through 14:00 Eastern time, the Dow Jones Industrial Average has battled back from morning losses and is trading up 33 points. The table was set for weakness on Wall Street after President Hosni Mubarak late Thursday vowed to stay in office until September elections. The news rekindled fears about the economic impact of unrest in the Arab world and sent the Dow down to 12,182 in morning action. However, by mid-morning, newswires were humming with reports that Mubarak has now agreed to relinquish power. Egyptians cheered and, in the U.S., the Dow moved off of morning lows. By midday, the industrial average was trading up to 12,263 and more than 80 off its worse levels. The day’s economic data, which included a modest improvement in the University of Michigan Consumer Sentiment Index for February and an in-line reading on the December Trade Balance, did little to move the market. Instead, trading has been relatively orderly and the bullish underlying tone continues. The CBOE Volatility Index (.VIX) lost .32 to 15.77. Trading in the options market remains brisk, but likely to slow ahead of the weekend. 8.5 million calls and 5.9 million puts traded so far.

Bullish Flow

Genworth (NYSE:GNW) calls are active amid relative strength in the sector after the Obama Administration called for scaling back the government’s role in the housing loan market. MGIC Investment (NYSE:MTG), PMI Group (PMI), and Radian Group (NYSE:RDN) are trading higher as well. GNW is up 74 cents to $13.76. Early options action includes 18,000 calls and 780 puts. March 14s are the most actives and are seeing mixed trading (47% Bid/48% Ask). Feb 14, Feb 15, Mar 14 and Mar 15 calls are seeing brisk trading as well. Implied volatility has eased about 3 percent to 34.5.

Bearish Flow

Nokia (NYSE:NOK) trades down $1.40 to $9.48 after the Finnish phone maker announced a partnership with Microsoft (NASDAQ:MSFT) and updated its financial targets. Investors don’t seem pleased with the news. Shares are getting slammed and, in options action, one investor sells a block of 11,000 July $11 calls at 29 cents each. It’s probably a liquidating trade, as open interest is 24,180.

Implied Volatility Mover

Office Depot (NYSE:ODP) adds 13 cents to $5.93 and a noteworthy trade today is a multi-exchange sweep of more than 6000 Mar 6 calls at 35 cents. The market was 25 to 35 cents. Looks like an opening buyer. 8,442 traded vs. 1,651 in open interest. Feb 6 calls are seeing interest as well, with 2,700 traded. Implied volatility is up 20 percent to 66. Earnings on tap for Feb 22 (before market), and after the February expiration.

Unusual Volume Movers

Bullish flow detected in Blackstone Group (NYSE:BX), with 16519 calls trading, or 2x the recent avg daily call volume in the name.

Bullish flow detected in Cheniere Energy (NYSEMKT:LNG), with 9318 calls trading, or 3x the recent avg daily call volume in the name.

Bullish flow detected in Sonus Networks (NASDAQ:SONS), with 4806 calls trading, or 16x the recent avg daily call volume in the name.

Increasing volume is also being seen in Nokia, JDS Uniphase (NASDAQ:JDSU), and Sandridge Energy (NYSE:SD).

Source: Friday Options Recap