Thursday Options Recap

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 |  Includes: ANIP, F, JBLU, LAVA
by: Frederic Ruffy

Sentiment

Stock market averages are mixed ahead of key jobs data Friday morning. After the 490-point rally Wednesday, the Dow Jones Industrial Average slipped at the open after the Labor Department reported that jobless claims rose by 12,000 to 402,000 last week. Economists were looking for a decline of 6,000 and the disappointing reading probably cooled some of the enthusiasm generated by ADP’s private sector report yesterday, which showed an increase of 206K jobs in November. Economists expect tomorrow’s headline number to show an increase of 125K public and private sector jobs during the month of November. Today’s other economic data included better than expected October Construction Spending (.8 percent vs. .3 percent consensus) and manufacturing, with the ISM Index up to 52.7 in November from 50.8 the month before. Steady trading across the Eurozone and a 5.6 percent rally in Hong Kong’s Hang Seng also helped sentiment Thursday. With an hour left to trade, the Dow Jones Industrial Average is down 7 points, but the tech-heavy NASDAQ added 10.5. CBOE Volatility Index (.VIX) lost .52 to 27.28. Trading in the options market is running about the usual levels, with 6.2 million calls and 5.8 million puts traded across the exchanges so far.

Bullish Flow

Jet Blue (NASDAQ:JBLU) gains 29 cents to $4.42 and morning trades on the airline include a 3,600-contract block of Mar 6 calls bought for 15 cents per contract. 5,262 now traded against 3,742 in open interest. Jan and Jun 5 calls on the airliner are busy as well. 7,060 calls and 765 puts now traded on the stock. Shares are on a five-day 30 percent winning streak and gaining altitude today after JP Morgan raised its financial outlook on a number of names in the space in the wake of AMR’s announced bankruptcy.

Ford (NYSE:F) adds 13 cents to $10.73 early-Thursday and one player sells a Dec 10 – $11 call spread on the automaker at 61 cents, 12000X. It possibly a closing trade or maybe a roll up from ITM to OTM calls, as open interest is sufficient to cover in both contracts. 22,830 Ford Dec $11 calls now traded, making it today’s second most actively traded equity options contract (behind BAC Jan 7.5 calls). Ford shares lost 9.2 percent last month, but are up 7.3 percent in the past two days and heading into monthly auto and truck sale numbers, due out a bit later today (13:00 ET).

Bearish Flow

Biosante Pharmaceuticals (BPAX) adds 9 cents to $2.49 and Dec 1.5 puts on the Lincolnshire, IL biotech are busy today. The top trade is a 653-lot at the 25-cent asking price. 5,588 now traded against 3,558 in open interest. Total options volume on the stock is 3,500 calls and 6,960 puts. Meanwhile, implied volatility in BPAX options is up 14 percent and elevated at 265. The company faces an FDA decision date on its Bio-T-Gel on Feb 14, 2012. However, that wouldn't explain the unusual volume in December 1.5 puts -- as those puts expire in 15 days. Earnings were last reported on 11/9.

Implied volatility Mover

Magma Design Automation (NASDAQ:LAVA) jumps $1.39 to $7.11 on news Synopsus is buying the software-maker for about $500 mln. Options order flow in LAVA includes a bunch of 250-lots of Jul 5 puts traded on the 5-cent bid. 4,340 traded and appears to be opening put writing on the stock. Implied volatility has plummeted 64 percent to 30.