Friday Options Recap

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Includes: CYH, DELL, FBSS, FMCN, NG, NVDA, PBR.A, RAX, WDC, XLF
by: Frederic Ruffy

Sentiment

Stock market averages are posting solid gains Friday. Strength across Eurozone equity markets helped set the table for morning gains on Wall Street after Italy pushed through a new austerity budget. Germany’s DAX rallied 3 percent and helped pace an advance across Europe’s equity markets. In the US, the only economic stat of the day showed the UofMichigan Consumer Sentiment Index improving to 64.2 in mid-November, which was up from 60.9 in mid-October and better than the 61.3 that economists were expecting. Meanwhile, Disney (NYSE:DIS) shares are up 6 percent and the Dow’s biggest winner on earnings news. At the same time, all thirty components of the industrial average are higher and the Dow is up 240 points. The NASDAQ gained 49. CBOE Volatility Index (.VIX) is off 2.56 to 30.25. Trading in the options market is active, with 7.35 million calls and 7.32 million puts traded so far.

Bullish Flow

Sandisk (SNDK) adds $1.65 to $51.07 and a 4,250-lot of Dec 55 calls is bought for $1.15 to open on ISE. Sentiment data indicate a customer order. 5,690 traded against 3,809 in open interest. SNDK has been ripping higher over the past few months and is up 57.6 percent since 8/19. Dec 55 calls on the stock are now 7.7% OTM with five weeks of life remaining.

Rackspace (NYSE:RAX) adds 89 cents to $42.59 and a 3945-lot of Dec 36 puts trades on the San Antonio, TX software developer at 70 cents on ISE. Data indicate the position was sold-to-open. 4,016 now traded. The contract is 15.5 percent OTM with a -.16 delta and 260 contracts of open interest. The underlying has performed well lately — up 24.8% since September. Earnings were reported on 11/7.

Bearish Flow

Dell Computer (NASDAQ:DELL) adds 35 cents to $15.31 and options volume is running 2X the daily average, with 40,000 puts and 8,180 calls traded on the computer maker so far. The top trade is a 6,700-contract block of Nov 14 puts bought for 14 cents per contract. It was tied to stock at $15.75 and possibly a closing trade, as the contract is 8.6 percent OTM, expires at the end of next week, and has 83,453 in open interest — the largest position in DELL. Most of the day’s other volume in DELL has been in smaller lots and seems to include a mix of buying and selling. The next biggest trade is a 974-lot of Nov 16 puts on the 94-cent bid. Meanwhile, implied volatility in DELL options is down 3.5 percent to 45.5, but might see an uptick early next week — as the company is due to report earnings Tuesday afternoon.

Implied

Sentiment



Stock market averages are posting solid gains Friday. Strength across Eurozone equity markets helped set the table for morning gains on Wall Street after Italy pushed through a new austerity budget. Germany’s DAX rallied 3 percent and helped pace an advance across Europe’s equity markets. In the US, the only economic stat of the day showed the UofMichigan Consumer Sentiment Index improving to 64.2 in mid-November, which was up from 60.9 in mid-October and better than the 61.3 that economists were expecting. Meanwhile, Disney (DIS) shares are up 6 percent and the Dow’s biggest winner on earnings news. At the same time, all thirty components of the industrial average are higher and the Dow is up 240 points. The NASDAQ gained 49. CBOE Volatility Index (.VIX) is off 2.56 to 30.25. Trading in the options market is active, with 7.35 million calls and 7.32 million puts traded so far.


Bullish Flow
Sandisk (SNDK) adds $1.65 to $51.07 and a 4,250-lot of Dec 55 calls is bought for $1.15 to open on ISE. Sentiment data indicate a customer order. 5,690 traded against 3,809 in open interest. SNDK has been ripping higher over the past few months and is up 57.6 percent since 8/19. Dec 55 calls on the stock are now 7.7% OTM with five weeks of life remaining.


Rackspace (RAX) adds 89 cents to $42.59 and a 3945-lot of Dec 36 puts trades on the San Antonio, TX software developer at 70 cents on ISE. Data indicate the position was sold-to-open. 4,016 now traded. The contract is 15.5 percent OTM with a -.16 delta and 260 contracts of open interest. The underlying has performed well lately — up 24.8% since September. Earnings were reported on 11/7.


Bearish Flow
Dell Computer adds 35 cents to $15.31 and options volume is running 2X the daily average, with 40,000 puts and 8,180 calls traded on the computer maker so far. The top trade is a 6,700-contract block of Nov 14 puts bought for 14 cents per contract. It was tied to stock at $15.75 and possibly a closing trade, as the contract is 8.6 percent OTM, expires at the end of next week, and has 83,453 in open interest — the largest position in DELL. Most of the day’s other volume in DELL has been in smaller lots and seems to include a mix of buying and selling. The next biggest trade is a 974-lot of Nov 16 puts on the 94-cent bid. Meanwhile, implied volatility in DELL options is down 3.5 percent to 45.5, but might see an uptick early next week — as the company is due to report earnings Tuesday afternoon.

Implied

Sentiment



Stock market averages are posting solid gains Friday. Strength across Eurozone equity markets helped set the table for morning gains on Wall Street after Italy pushed through a new austerity budget. Germany’s DAX rallied 3 percent and helped pace an advance across Europe’s equity markets. In the US, the only economic stat of the day showed the UofMichigan Consumer Sentiment Index improving to 64.2 in mid-November, which was up from 60.9 in mid-October and better than the 61.3 that economists were expecting. Meanwhile, Disney (DIS) shares are up 6 percent and the Dow’s biggest winner on earnings news. At the same time, all thirty components of the industrial average are higher and the Dow is up 240 points. The NASDAQ gained 49. CBOE Volatility Index (.VIX) is off 2.56 to 30.25. Trading in the options market is active, with 7.35 million calls and 7.32 million puts traded so far.


Bullish Flow
Sandisk (SNDK) adds $1.65 to $51.07 and a 4,250-lot of Dec 55 calls is bought for $1.15 to open on ISE. Sentiment data indicate a customer order. 5,690 traded against 3,809 in open interest. SNDK has been ripping higher over the past few months and is up 57.6 percent since 8/19. Dec 55 calls on the stock are now 7.7% OTM with five weeks of life remaining.


Rackspace (RAX) adds 89 cents to $42.59 and a 3945-lot of Dec 36 puts trades on the San Antonio, TX software developer at 70 cents on ISE. Data indicate the position was sold-to-open. 4,016 now traded. The contract is 15.5 percent OTM with a -.16 delta and 260 contracts of open interest. The underlying has performed well lately — up 24.8% since September. Earnings were reported on 11/7.


Bearish Flow
Dell Computer adds 35 cents to $15.31 and options volume is running 2X the daily average, with 40,000 puts and 8,180 calls traded on the computer maker so far. The top trade is a 6,700-contract block of Nov 14 puts bought for 14 cents per contract. It was tied to stock at $15.75 and possibly a closing trade, as the contract is 8.6 percent OTM, expires at the end of next week, and has 83,453 in open interest — the largest position in DELL. Most of the day’s other volume in DELL has been in smaller lots and seems to include a mix of buying and selling. The next biggest trade is a 974-lot of Nov 16 puts on the 94-cent bid. Meanwhile, implied volatility in DELL options is down 3.5 percent to 45.5, but might see an uptick early next week — as the company is due to report earnings Tuesday afternoon.

Implied Volatility Mover

Options volume in the SPDR Financials (NYSEARCA:XLF) is now 1.42 million contracts, with put options accounting for 1.32 million, or 93 percent, of the overall flow. In addition to the impressive Dec $11 - 13 spreads highlighted at 14:07, recent trades in the ETF include a Dec $11 - 13 (2X1) put ratio spread, in which the strategist bought 56,000 of the 13s to sell 112,000 Dec $11s and paid 29 cents for the 1X2. Like the action in the Dec 11 - 13 (1X1s) mentioned earlier, the ratio spread is possibly a position adjustment and maybe a roll in strike prices. Meanwhile, implied volatility in options in the fund is down 10 percent to 38 on the day and about 3 percent for the week. Still, shares are off .7 percent since last Friday and the heavy volume in XLF puts today seems to reflect the ongoing uncertainties about problems in the financial world that investors still face.

Unusual Volume Movers

Bearish activity detected in Focus Media (NASDAQ:FMCN), with 17193 puts trading, or 3x the recent average daily put volume in the name.

Bullish flow detected in Community Health (NYSE:CYH), with 6761 calls trading, or 18x the recent average daily call volume in the name.

Bullish flow detected in AuRico Gold (NYSE:AUQ), with 2789 calls trading, or 6x the recent average daily call volume in the name.

Meanwhile, unusually high options volume is being seen in NovaGold (NYSEMKT:NG), Petrobras (NYSE:PBR), and Nvidia (NASDAQ:NVDA).