Monday Options Recap

 |  Includes: AA, BAC, CLNE, DGWIY, LUV
by: Frederic Ruffy


Stocks are trading mixed in uninspired market action Monday. With no earnings or economic data to guide investors, volume is light and trading has a wait-and-see feel. Oil prices are getting some attention after crude moved up 57 cents to $108.50 per barrel. Meanwhile, investors are waiting for the first round of corporate earnings reports. Dow component Alcoa (NYSE:AA) kicks things off one week from today. This week’s economic calendar is also light. ISM Services Index and Fed minutes are out tomorrow. There’s not much data beyond that. So, it might be a slow week. Trading is very quiet too so far. The Dow Jones Industrial Average has traded in a 38-point range and is up 4 points in the final hour. The tech-heavy NASDAQ lost 8.8. The CBOE Volatility Index (.VIX) added .42 to 17.82. Volume is running only 65 percent the recent average daily, with 5.3 million calls and 4.5 million puts traded so far.

Bullish Flow

Clean Energy Fuels (NASDAQ:CLNE) shares are up $1.15 to $17.47 and extending a recent rally on signs of improved government support for natural gas. Obama said last week that he believes that the commodity has “enormous” potential as an alternative to oil and also said that natural gas vehicles are one subject of bi-partisan agreement. CLNE is now up 35.2 percent since March 17. Options volume is 9,380 calls and 2,060 puts so far today. It seems that some investors are looking for the rally to continue this week and next, as April 17 and 18 calls are the most actives, with 1337 and 1889 traded, respectively, and about two-thirds traded at the ask. Jun 20 calls are the third most actives, with 1247 changed hands (88 percent ask).

BofA (NYSE:BAC) adds 10 cents to $13.47 and upside call buyers are showing interest in the May and Jun 14s Monday morning. The top trade is a 19000-contract block of May 14 calls at 36 cents on ISE, which is an opening customer buyer, according to ISEE data. 42,720 now traded. June 14 calls, which have traded 10,130 contracts, have traded 97 percent Ask. April 14, April 15, and May 13 calls are seeing interest as well. 80,000 calls and 9,500 puts traded in the name, which is about 50 percent of the total volume in the financial (fin1) so far today. BofA shares fell 1.7 percent on 3/23 after the Federal Reserve rejected the bank’s plan to raise dividends. BofA is expected to submit a new plan for approval. Earnings are slated for April 15 (before market).

Bearish Flow

Put volume picked up in Southwest Airlines (NYSE:LUV), with 5,130 contracts traded, or 6X the average daily put volume for the airliner. Shares are down 39 cents to $12.28 after Southwest canceled 50 flights to inspect fuselage cracks in a fleet of 737s. The options action has been in smaller sizes. The top trade is a 250-lot of April 12 puts at the 25-cent asking price. 2,900 contracts now traded. April 11 and 13 puts, which expire in 11 days, are the next most actives.

Implied volatility Mover

Duoyuan Global Water (DGW), a Chinese water treatment company, is down 69 cents to $4.80 and touching new 52-week lows today. 6,000 puts and 2,140 calls traded in the name so far, which is about 4X the average daily volume. The top trade is a 250-lot of May 5 calls at 65 cents when the market was 65 cents to $1. Looks like an opening seller. The next biggest trade is a 211-lot of April 5 puts at the 95-cent ask price. 2,237 traded. April 2.5 puts are the next most actives. 1600 traded. Implied volatility is up 19.5 percent to 195.5. Shares fell 11.7 percent on 3/23 after earnings were reported and are down another 34.3 percent since that time. Today’s options flow seems to reflect concerns about additional losses in DGW in the days/weeks ahead.