Stock market averages are higher after Wednesday’s steep slide, but the rebound lacks any real conviction Thursday. Although Hong Kong’s Hang Seng lost 5.5 percent and paced a volatile decline across Asia’s equity markets, steady trading throughout the Eurozone helped set the table for early strength on Wall Street. Stock indexes held steady across Europe after yields on Italian bonds eased off record highs. In the US, economic data was in focus after the Labor Department said that jobless claims fell by 10,000 last week, to 390K and 10K better than expected. Separate data showed import prices falling .6 percent in October and .5 percent more than economists had predicted. Meanwhile, the Trade Balance narrowed to $43.1 billion in September, down $44.9 billion in August and better than the $45.9 billion that was expected. Cisco (CSCO) is also helping the Dow Jones Industrial Average, up 6.1 percent on earnings. 25 other Dow stocks are also higher and the industrial average is up 95 points. The tech-heavy NASDAQ is lagging, however, and now down 3.5 points. After a 32 percent rally yesterday, CBOE Volatility Index (.VIX) gave back 2.94 points to 33.22. Overall trading volume is light, with 5.9 million calls and 6.5 million puts traded across the exchanges so far.
JP Morgan (JPM) adds 13 cents to $32.67 and a few bullish trades sufraced in the bank today. One noteworthy trade is a 7700-contract block of Feb 37 calls for $1.31 per contract on ISE. Data from the exchange is reporting an opening customer buyer. The block looks tied to 254K shares at $32.93. Separately, one investor bought 1,600 Nov 36 calls on JP Morgan for 9 cents. The third largest trade in the bank Thursday is 1,100 Nov 33 puts sold at $1 and tied to shares at $32.92, delta neutral. Meanwhile, implied volatility in options on JP Morgan, which jumped 29 percent to 49.5 yesterday, is down 6 percent to 46.5 and now smack-dab in the middle of a 52-week high and low of 73.5 (8/8) and 17.5 (4/21).
Kohl’s (KSS) gains $1.77 to $56.06 after the retailer reported third quarter earnings of 80 cents per share, which was a penny better than Street estimates. Revenues were in-line and the company offered in-line guidance for the fourth quarter. Shares are up on the results and the top options trades include a Nov 50 – 55 put spread at 55 cents, 1500X and a Dec 50 – 55 put spread for 60 cents, 1500X. A nickel was paid to swap November to December and probably exits a position in the Nov 50 – 55 put spread opened on Nov 2 for about $1.06. Shares are up 3 percent since that time and, by rolling the position to December, the strategist is buying an additional month for the trade to play out.
Implied volatility Mover
Tanzanian Royalty Exploration (TRX) is under fire and implied volatility in the options on the South Surrey, BC gold miner is moving sharply higher Thursday. Shares saw heavy volume and were halted. The stock resumed trading and is now down $1.38 ti $2.04. The move has left investors searching for a catalyst, as there are no headlines on the stock. Some are speculating that the volatility is related to news that Tanzanian police have banned protests. For whatever reason, TRX is taking a hit today and options volume on the stock is 25,000 puts/6050 calls. Typical volume is about 175 contracts through midday. The top trades include a spread, in which the investor apparently sold 1500 Jan 3 puts on TRX to buy 2,000 Nov 2 puts and is possibly rolling a position from Jan to Nov, down one strike. Jan 2 puts, Nov 2 calls, Nov 4 puts, Nov 3 puts and Nov 3 calls are actively traded as well. Meanwhile, implied volatility in the options on the stock surged 170 percent and is at an extreme of 285.