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Sentiment

Stock market averages are holding modest gains late-Tuesday. Weakness across Eurozone equity markets and another dip in the euro set the table for cautious morning trading on Wall Street. France’s CAC 40 Index paced the decline in Europe with a 1.9 percent loss and the euro gave up .7 percent on the buck after stubbornly high bond yields in Italy kept worries alive about the still spreading debt crisis. Yet, stocks strayed from their usual pattern and, in contrast recent trends, there was a clear disconnect between trading in Europe and in the US. Domestic economic news seemed to help after Retail Sales rose .5 percent in October and .1 percent more than expected. The PPI fell more than expected and the NY Empire Manufacturing Index showed modest improvement. For whatever reason, stock market averages had recovered losses through midday and strengthened in afternoon action. The Dow Jones Industrial Average is now up 73 points and the tech-heavy NASDAQ added 35.8. CBOE Volatility Index (.VIX) slipped .56 to 30.57. Trading in the options market is beginning to pick up heading into this week’s expiration, with 7.9 million calls and 6.3 million puts traded across the exchanges so far.

Bullish Flow

Serious call volume in Sirius XM (NASDAQ:SIRI) as some players are seizing Mar 2 calls on the satellite radio operator. One player pay 13 cents per contract, 19700X. Shares are flat at $1.68 and more than 40,000 traded against 16,000 in open interest. Implied volatility in SIRI is up 11 percent to 56 and today’s options order flow on the stock seems bullish ahead of a presentation at a Liberty Media conference Thursday.

Sunoco (NYSE:SUN) loses 25 cents to $36.54 and a 5000-contract block of Nov 36 puts is sold-to-open at 33 cents on ISE. Data indicate a customer initiated the trade. 6,930 traded against 953 in open interest. The contract is 1.5 percent OTM with a -.35 delta and expiring in three days. The underlying has been drifting lower lately, down 4.1 percent since earnings were reported on 11/3.

Bearish Flow

FMC Technologies (NYSE:FTI), a Houston-based provider of IT services to the energy industry, is up $1.60 cents to $48.94 and options volume is 7.5X the average daily for the stock, driven by downside put buyers. Dec 45s are the most actives. 1,639 traded, including a multi-exchange sweep of 596 contracts for $1.25 when the market was $1.10 to $1.25. Sentiment data is reporting an opening customer buyer. Another sweep of 1,334 Nov 45 puts traded at 16 cents when the market was 10 to 15 cents. 1,370 traded. Meanwhile, implied volatility in options in FTI is up 10 percent to 47 and the bearish trading might be in reaction to a presentation at a BofA Merrill 2011 Energy Conference scheduled for today.

Implied volatility Mover

Transocean (NYSE:RIG) offshore is under fire Tuesday afternoon and implied volatility in the options on the oil driller is up sharply after Reuters reported that the company's CEO was asked about prospects for settling with BP over the Macondo incident, and he said that the focus is on preserving its indemnity. Shares are down $2.59 to $47.12 and Nov 47.5 puts, which are now in-the-money heading into this week's expiration, are the most actives. 7,413 traded. Nov 45 puts, Nov 47.5 calls and Nov 50 calls on RIG are actively traded as well. Players are jockeying for position for the next move in the underlying and implied volatility in the options jumped 30 percent to 58.

Source: Tuesday Options Recap