Friday Options Recap

by: Frederic Ruffy


Stock market averages are up on jobs data, but well off session highs late Friday. The table was set for a morning advance on Wall Street after the Labor Department said that the economy added 244,000 jobs last month. Economists were looking for an increase of 185,000. Other details of the report were not so bullish. Hourly earnings rose .1 percent and half as much as expected. The unemployment rate edged up to 9 percent. Economists were expecting the rate of unemployed to hold steady at 8.8 percent. The rally on Wall Street was also held in check by the sliding euro. The European currency lost 1.3 percent on the buck and is now at 1.434. EUR/USD was approaching 1.50 earlier this week. The rebound in the buck continues to weigh on some of the commodities. Silver, which is down nearly 30 percent on the week, is struggling to find a bid. Crude oil gave back early gains and is off another $2.27 to $97.53 a barrel. The Dow Jones Industrial Average is up 40 points, but 135 points off its best levels. The tech-heavy NASDAQ gained 11.3. The CBOE Volatility Index (.VIX) hit a morning low of 16.12 and is now up .77 to session highs of 18.97. Trading in the options market is active, with 8.4 million calls and 8.2 million puts traded.

Bullish Flow

Sequenom (NASDAQ:SQNM) adds 93 cents to $7.61 and calls on the biotech are busy today after the company reported a quarterly loss of 13 cents per share. Analysts had predicted a 19-cent per share loss. Sequenom also says that it’s completed a study of its fetal Down syndrome test and will results will be announced some time later in 2011 when submitted to a medical journal. 6,360 calls and 610 puts traded in SQNM so far. June 8 calls, which are now 5.1 percent OTM, are the most actives. 2,250 traded. May 8 and Sep 9 calls are actively traded as well.

Sandridge Energy (NYSE:SD) trades down 6 cents to $10.61 after posting a 2-cent per share quarterly loss, which was four cents worse than Street estimates. In options action, on investor bought a 25000-contract block of Sep 12 calls at 90 cents each. It was tied to 1 million shares at $10.55 and might close a position from Mar 3 when 25,000 traded for $1.10. Separately, an investor today bought 7,300 Sep 13 calls at 73 cents per contract. Open interest is 16,898. So, possibly closing activity as well.

Bearish Flow

Tyson Foods (NYSE:TSN) loses 17 cents to $19.05 and investors are buying TSN puts ahead of the meat producer’s earnings report. May 18 puts are the most actives. 3,910 traded (83 percent Ask). Open interest is 1,666 contracts. Similar activity is happening in the June 18 puts. Total volume is 6,300 puts and 960 calls. Implied volatility is up 10 percent to 33.5 ahead of the results, due Monday morning.

Implied volatility Mover

Deutsche Bank (NYSE:DB) has come under fire today after Reuters reported that the US has sued the German bank for more than $1 billion related to a mortgage fraud case (but the article is dated May 3). Options volume is 7,750 puts and 290 calls, or 9X the average daily for DB. Shares are down $1.47 to $60.45 and the top trade is a 2,500-contract block of May 60 puts at 27 cents on ISE; which is an opening buyer, according to ISEE data. 3,950 traded. May 55 and 57.5 puts are busy as well. Implied volatility rose 11 percent to 35.

Unusual Volume Movers

Bullish flow detected in Keryx Biopharmaceuticals (NASDAQ:KERX), with 3266 calls trading, or 5x the recent avg daily call volume in the name.

Bearish activity detected in Santander Finance (STD), with 6369 puts trading, or 4x the recent avg daily put volume in the name.

Bullish flow detected in Ingersoll Rand (NYSE:IR), with 11841 calls trading, or 10x the recent avg daily call volume in the name.

Increasing volume is also being seen in Williams Companies (NYSE:WMB), Sirius XM Radio (NASDAQ:SIRI), and Yahoo (NASDAQ:YHOO).