Thursday Options Recap

Includes: CS, LUK, NOK, NVLS-OLD
by: Frederic Ruffy


Stock market averages are holding modest gains with help from economic data Thursday. Data released before the opening bell showed jobless claims falling by 19,000 to 366,000 last week, which was much better than the 5,000 increase that was expected. Manufacturing numbers were also better-than-expected. NY Empire Index printed at 9,53 in December, up from .61 last month and compares to 3.0 consensus. Philly Fed rose to 10.3 this month, from 3.6 in November and better than the 4.5 that economists had expected. The Producer Price Index rose .3 percent in November and .2 percent more than expected. However, Industrial Production dipped .2 percent during that time. Economists were looking for an increase of .2 percent. Still, the overall data were mostly positive and the Dow Jones Industrial Average is sporting a 65-point gain in the final hour. CBOE Volatility Index is down .96 to 25.08 and off session lows of 23.88. Options volume is heavy due to the expiration and because a number of ETFs are going ex-dividend. 11 million calls and 6.6 million puts traded so far.

Bullish Flow

Credit Suisse (NYSE:CS) adds 71 cents to $23.29 after Bloomberg reported that the firm is consolidating banking operations to cut costs. The top options trade in CS so far today is a 3,555-lot of Jan 25 calls bought for 90 cents per contract. 11,030 now traded against just 79 contracts in open interest. Jan 23 and 24 calls are busy as well. 14,000 calls and 1,560 puts traded on the bank so far, as some players might be hoping that positive corporate news will offset the persistent worries about the debt crisis that have dogged shares of the European banks in recent months. CS shares are down 42.3 percent year-to-date.

Options volume in Nokia (NYSE:NOK) is running 3.5X the daily average, being driven by a buyer of 24,000 Jul 8 calls on the stock for 20 cents per contract. The position looks opening and tied 395K shares at $4.88. Shares of the Finnish communications giant have not performed well in 2011 and are down 52.6 percent year-to-date. Today's upside call purchase might be a bet that shares will rebound in the first half of 2012. NOK last fetched more than $8 per share since late-May. An analyst said today that he expects the company to unveil a new Lumia 800 at a CES event in January 2012.

Bearish Flow

Jefferies (JEF) is flat at $12.38 and options volume on the investment firm is 13,000 puts and 2730 calls. The top trade is a 3150-lot of Jan $14 puts for $2.10 on ISE, where data is reporting a customer bought-open a new position. 6,430 now traded against 1,112 in open interest. The next biggest trade is a 1,000-lot of April 3 puts, which are more than 75 percent out-of-the-money, traded at the 15-cent asking price. It's possibly closing activity. 2059 traded against 5,285 in open interest. Jan 9 puts on Jefferies are seeing interest as well and overall levels of implied volatility have eased 6 percent to 65, as today's order flow on the stock is a bit lighter than normal (65%) and seems to include a mix of opening and closing activity.

Implied volatility Mover

Today's takeout of Novellus Systems (NASDAQ:NVLS-OLD) by Lam Research has shares up 21% near $42, and it looks like a 4million payday for one or two savvy option traders who built the largest block of call open interest in NVLS over the past six weeks. Today we saw a closing sale of 35K March 40 calls for 4.45 vs 42.30 stock, and trade history shows the position was opened in two tranches, 25K for 1.30 on Oct 31 when shares were near $33 and another 10K on Nov 22 for 1.35 when shares were near the same level. Meanwhile, implied volatility in NVLS options has eased 18 percent to 35.