Wednesday Options Recap

Includes: AA, ACN, MBI
by: Frederic Ruffy


Stocks rallied around news of Central Bank intervention and better-than-expected economic data Wednesday. In China, officials lowered bank reserve requirements after Shanghai’s Composite Index plummeted for a 3.3 percent loss Wednesday. Separately, the Federal Reserve along with other global Central Banks announced plans to provide liquidity by increasing swap lines for US dollars into the banking system. The domestic economic news was supportive as well after ADP reported that the US economy added 206K private sector jobs in November, which easily topped expectations of 125K. Data on productivity, manufacturing [PMI] and pending homes sales were also better than expected. Consequently, it was off to the races on Wall Street Wednesday and the Dow Jones Industrial Average is up 390 points heading into the final hour. The NASDAQ added 83. CBOE Volatility Index (.VIX) is down 2.56 to 28.08. Trading is picking up from the slow pace seen Monday and Tuesday. 8.4 million calls and 7.1 million puts traded across the exchanges so far.

Bullish Flow

MBIA (NYSE:MBI) sees a midday spike on high volume, is now up $1 to $9.17, and moving to session highs. Recent options trades on the mortgage insurance company include a 15000-contract block of Jan $11 calls bought for 75 cents per contract. it was tied to shares at $8.94 on a 36 delta and appears to be an opening trade. Jan 7.5, 9 and 10 calls on MBIA are also seeing interest, as are the Feb 10s. 28,000 calls and 2,030 puts traded on the stock and implied volatility is up 9 percent to 100 (First posted at 14:20).

Bearish Flow

Accenture (NYSE:ACN) jumps $2.25 to $57.82 and morning options trades on the Dublin, Ireland management services and outsourcing company include a 3600-contract block of Jan 57.5 puts for $3.05 per contract on the International Securities Exchange. Data from the ISE reports an opening customer buyer. 5,940 now traded against 1,286 in open interest. One or more investors might be buying at-the-money puts on ACN to hedge recent gains in the stock. Shares are on a four-day 7.9 percent run higher.

Implied volatility Mover

Alcoa (NYSE:AA) shares are up and implied volatility in the options on the aluminum maker is down today. Shares gained 50 cents to $9.81 and are one of 29 Dow stocks moving higher late-Wednesday. Only Home Depot shares are lower within the Industrial Average. Meanwhile, in AA options action, volume is 62,000 calls and 12,000 puts. Dec $10 calls, which are now 1.9 percent OTM and expiring in 16 days, are the most actives. 27,586 traded (83 percent Ask) against 19,451 in open interest. Dec $11, Jan $11 and April 10 calls on Alcoa are actively trades as well and implied volatility in options on the stock is down 8 percent to 49. Overall flow seems bullish. The stock is up 10.8 percent from a week ago, but still more than 45 percent below the 52-week highs seen in mid-April.