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Sentiment

Volatility is extreme across global financial markets today. Crude oil is down $5.14 to $86.79 per barrel. Gold hit a record high early, but is down $6.7 to $1,658.2. The yellow metal traded in a wild $40 range today. Bonds are bid and the yield on the ten-year is falling below 2.5 percent. What! The dollar gained 2.5 percent on the yen amid reports of intervention from Japanese officials to cool their currency. The euro lost 1.3 percent on the buck on worries that Italy or Spain might be next in line to request EU financial support. The Dow Jones Industrial Average sank in morning trading and the selling intensified through midday. With an hour remaining in today’s brutal session, the Dow is down 350 points. The tech-heavy NASDAQ lost 93. CBOE Volatility Index (.VIX) jumped 5.30 points to 28.68. Trading in the options market is very busy today and reflects the high levels of investor fear. 12.2 million calls and 15.7 million puts traded across the exchanges so far.

Bullish Flow

Ford (F) touched new 52-week lows today after a three-day 12.8 percent skid. Shares are now down 61 cents to $11.04. Options on the automaker are actively traded again today. 127,000 calls and 56,000 puts so far. August 12 calls, which were still in-the-money Tuesday morning before Ford reported an 8.9 percent increase in July sales, are the most active. 37,000 traded against 13,972 in open interest. Some investors might be buying-to-open new positions on hopes for a rebound in the short-term, as 70 percent of the total volume traded at the ask. The Aug 12 call on Ford is now 8.7 percent out-of-the-money and expires in a little over two weeks. The market is 15 to 17 cents. Aug 14, Oct 13 and the Weekly $11 calls on Ford are seeing active trading today as well.

Bullish flow detected in Comcast (CMCSA), with 16,400 calls trading, or 2x the recent avg daily call volume in the name. Shares, which edged modestly higher on better-than-expected earnings yesterday, are down 69 cents to $22.09. Aug 22 calls are the most actives. 5,040 traded (96 percent Ask) vs. 276 in open interest. Opening buyers appear to be driving the order flow. Aug 26, Sep 22 and Sep 23 calls are seeing interest as well. Aug and Sep 22s are the most active puts. No news since the earnings release. Some investors might be buying calls and looking for a short-term rebound. CMCSA is down 12.8 percent since July 26.

Bearish Flow

Kohl's (KSS) loses $2.61 to $49.18 on disappointing July same store sales numbers (-4.6 percent vs. +3.6 percent consensus). A noteworthy trade in the retailer this morning is a 5,000-contract block of Aug 52.5 calls sold at 40 cents per contract. It was tied to 100K shares at $49.90 and looks opening. The Aug 52.5 call on KSS is now 6.8 percent OTM with 15 days of life remaining. 7,629 traded against 2,760 in open interest.

Implied volatility Mover

Leap Wireless (LEAP) is falling to new 52-week lows today and is down $2.95 to $7.09 after the company reported a quarterly loss of 85 cents per share, which was 35 cents worse than expected. A noteworthy options trade in LEAP today is a buyer of 10,000 Jan13 7.5 puts at $2.25 per contract. The purchase was tied to 330K shares at $7.93. 13,145 now traded against 12 contracts of open interest. The market for the Jan13 7.5 put on LEAP, which is 5.5 percent ITM, is now $2.36 to $2.76. Meanwhile, implied volatility in LEAP options is up 8 percent and elevated at 75.

Source: Thursday Options Recap