Wednesday Options Recap

Includes: AUY, CLNE, SGEN, UXG
by: Frederic Ruffy


Stocks are broadly higher with help from friendly comments from Federal Reserve Chairman Ben Bernanke. In testimony to Congress, the head of the Central Bank indicated that further policy easing might be unleashed should the economy need it. Meanwhile, the euro is holding a 1.3 percent gain against the buck and European stock benchmarks finished mostly higher on diminishing concerns about Italy’s debt problems. Oil prices are moving on bullish inventory data and dollar weakness. Crude was recently up 54 cents to $97.97. Gold gained $17.4 to $1,797.70 an ounce. On Wall Street, the Dow Jones Industrial Average is up 92 points and the tech-heavy NASDAQ added 27. With an hour left to trade, CBOE Volatility Index (.VIX) lost .90 to 18.97. Trading in the options market is active, with 6.7 million calls and 6 million puts traded so far.

Bullish Flow

Rallying gold prices has sparked a flurry of activity in a number of gold mining names today. Yamana Gold (NYSE:AUY) adds 41 cents to $13.26 after gold surged another $24.9 to $1,587.2 an ounce. Meanwhile, in AUY options trading, one investor sold the Oct 13 – 14 call spread at 41 cents, 6700X. Both contracts have now traded more than 10K and is possibly rolling up from in-the-money to out-of-the-money calls after a two-week 17.4 percent rally in shares. 37,000 calls and 1,975 puts now traded in the Toronto-based gold miner.

Upside call buyers in US Gold Corp. (NYSE:UXG). Shares have added 60 cents to $6.64 and Nov 7.5s are the most actives. 6,475 traded (79 percent Ask) against 654 in open interest and ISEE data is consistent with opening buyers. Aug 5, Aug 7.5, and Nov 5 calls are seeing some interest as well. The bullish trading is probably a play on gold, which is now up $21.7 to $1584 an ounce. Shares of the Toronto-based miner have now rallied 22.2 percent since Jun 17 and are testing a 200-day exponential moving average.

Bearish Flow

Seattle Genetics (NASDAQ:SGEN) adds 38 cents to $20.18 and one investor bought at 3500-contract block of Jul 15 puts on the Bothell, WA biotech at 30 cents per contract. It might be a short-term hedge ahead of a Feb 14 FDA Panel for brentuximab vedotin. Briefing documents for the drug were released yesterday. Shares traded down 3.6 percent.

Implied volatility Mover

Clean Energy Fuels (NASDAQ:CLNE) adds $1.83 to $16.91 and options volume is running 8X the average daily after BofA/Merrill upgraded the stock to Buy from Outperform. Jul 17 calls, which are now 9 cents OTM heading into the expiration, are the most actives. 2,170 traded against 95 contracts of existing open interest. The flow seems driven by a mix of buyers, as 49 percent traded on the bid and 28 percent at the ask. Aug 17 calls and Jul 16 puts are seeing interest as well. Meanwhile, implied volatility in CLNE options is up 12.5 percent to 54.