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Sentiment

Trading is quiet on a slow news day Monday. With no earnings of importance or economic data to guide the action, President Obama’s $3.73 trillion budget was the topic of some discussion in the morning hours. The outline includes plans to freeze domestic spending for five years. Yet, the market showed relatively little reaction to the budget and, instead, stocks are mixed in aimless trading. Wal-mart (WMT) is the Dow’s biggest loser after JP Morgan cut its rating on the stock. Seventeen other Dow stocks are lower, twelve higher, and the industrial average is flat heading into the final hour. The NASDAQ has added 6.6. The CBOE Volatility Index (.VIX) gained .17 to 15.86. Trading in the options mart is slow. 8.2 million calls and 5.4 million puts so far.

Bullish Flow

NASDAQ OMX Group (OMX) continues to see heavy trading following Friday's news that NYSE and Deutsche Borse are in advanced merger talks. NDAQ is up another $1.19 to $29.31 and touching new 52-week highs today after a four-day 13.5 percent rally. NASDAQ is now up nearly 16 percent since earnings were reported on 2/2. Meanwhile, today's options volume is 7,900 calls and 1,070 puts. Sep 30 calls are the most actives. 2,840 traded (77 percent Ask). Looks like buyers are driving the flow in Feb 28, Feb 29, Jan 30 and Jan 35 calls as well. Implied volatility is up 6 percent to 35.

45000 calls and 12000 puts traded in DELL in front of earnings, due tomorrow after market. The top trade is a buyer of 12,000 Mar 15 calls at 20 cents each. It was tied to 241K shares at $14. Looks opening. 22,270 now traded vs. 3,721 in open interest. Feb 14 calls are the second most actives. Volume is approaching 9,900. Implied volatility is up 7 percent to 29.

Bearish Flow

Masco (MAS), the Taylor, MI lumber and wood company, is flat at $14.17 and a block of 3000 February 14 puts at 53 cents on ISE is an opening customer buyer, according to sentiment data. This investor might be buying Feb 14 puts on Feb 14 to hedge earnings due Feb 14, after market. 5,280 now trraded. Implied volatility is up 6 percent to 51.5 ahead of the news.

Implied Volatility Mover

35,000 calls and 6,640 puts traded in AMD through midday. Shares are up 30 cents to $8.58 and the top trade is 2293 Mar 9 calls at 31 cents on ISE. It’s an opening customer buyer, according to ISEE data. 14,260 now traded. Feb 9, April 7, April 8, and July 10 calls are busy as well. Implied volatility is up 15 percent to 47. Fly on the Wall and Briefing both cite takeover chatter. AMD is also due to present at a Goldman Sachs tech conference Wednesday.

Source: Monday Option Recap