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Sentiment

Trading remains rangebound Wednesday. The table was set for modest market strength early after bond yields fell in Spain and Italy on hopes Greece might reach a deal with creditors and avoid a messy debt default next month. However, the early gains were lost and mixed trading returned through midday. With a light economic calendar this week, earnings are driving a lot of the action. Disney (NYSE:DIS) is seeing post-earnings strength and is among 18 Dow stocks holding gains today. Cisco (NASDAQ:CSCO) and Groupon (NASDAQ:GRPN) release after the close. Weekly jobless claims and an ECB monetary policy meeting come into focus tomorrow. Very narrow trading is order of the day again today. The Dow has traded in a 76-point range and is flat. With thirty minutes left to trade, the NASDAQ has added 10. CBOE Volatility Index (.VIX) is up .51 to 18.17. Trading in the options market is light, as falling volatility is hurting volumes. 7.5 million calls and 6.5 million puts traded across the exchanges thus far.

Bullish Flow

133 stocks will release earnings before tomorrow’s open, with Cisco and Pepsi leading the volume. For the group, calls outnumber puts nearly 2:1 and CSCO flow is triple the average time-weighted volume, on track for nearly 450,000 contracts today. Top 5 most actives in Cisco are calls, with Feb 21s leading the list with nearly 37K trading and an average price of 28cents. ISE data shows a mix of opening and closing customer buyers behind the volume there.

Etrade Financial (NASDAQ:ETFC) adds a dime to $9.20 and a 10000-contract block of Jan14 $10 call trades on the broker at the $2.10 asking price. Looks opening and tied to 600K shares for $9.17. A Dow Jones article today mentioned ETFC in a piece titled TD Ameritrade Still Eyes Possible Deals, but noted that Amertrade (NYSE:AMTD) said last year it wasn’t interested in a deal with the online broker and Etrade said it wasn’t for sale. Still, today’s hefty 2014 call buyer seems to be bracing for a sizable move in Etrade shares in the months/years ahead, even as shares have been drifting somewhat aimlessly for months now.

Bearish Flow

Market Vectors Russia Fund (NYSEARCA:RSX) loses 11 cents to $31.88 and 11,040 Mar 28 puts trade on the ETF against 611 in open interest. The top trade is 5846 contracts for 35 cents when the market was 30 to 35 cents. Another 4950-lot traded for 35 cents when the bid-ask was 25 to 35 cents. The apparent buying of 28 puts on the fund, which are 12.1 percent OTM, might have been initiated to hedge short-term tail risk. The delta is -.14 and the contract expires in 37 days.

Implied volatility Mover

Triquint Semiconductor (TQNT) tacked on 25 cents to $6.82 and implied volatility in the options on the chipmaker is moving ahead of earnings. Total options volume is running 4X the daily average. 14,000 calls and 4,165 puts traded in the name so far. Feb 7 calls, which are 18 cents OTM and expiring 9 days after the company reports, are the most actives. 5,710 traded. Feb 6 and Mar 7 calls are the next most actives and it seems that some investors are taking bullish positions ahead of the news. Implied vols are moving up 13 percent to 76. The stock can make big moves around earnings. It fell an average of about 26 percent after the past two reports. The company will release results again today after the closing bell.

Source: Wednesday Options Recap