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Sentiment

Trading was mixed and market averages have been range-bound on expiration Friday. Gains across Asian and European equity markets helped set the table for steady trading on Wall Street. The domestic economic news included the January Consumer Price Index, which was up .2% and .1% less than expected. A separate report showed the List of Leading Indicators up .4% in January and .1% less than expected. The data didn’t seem to matter much and, after the triple digit gain that pushed the average to new multi-year highs, the Dow has struggled to forge significant gains ahead of the three-day weekend. The expiration is possibly a factor, but in the bigger picture the pattern of mixed trading seems to have become engrained. The grind continues and the S&P 500 was up just 3 points. So far in 2012 has experienced average daily moves of just 5.8% and the actual or historical volatility of the S&P over the past 30 days has plummeted to less than 9%. CBOE Volatility Index (.VIX) is responding to the low levels of volatility and is down 1.30 to 17.92. Meanwhile, trading in the options market is active due to the expiration today. 8.7 million calls and 6.5 million puts traded across the exchanges so far. The Dow is holding a 47 point gain, but the Nasdaq lost 9.

Bullish Flow

Nisoruce (NYSE:NI) sees a spike and is trading up 81 cents to $23.91 on volume of 9 million shares Friday. By way of comparison, typical volume is about 2 million. Shares are rallying around a Sparkspread blog story that suggested the company turned down an all cash buyout offer. The deal apparently valued the Merryville, IN, electric utility at a 30% premium. Meanwhile, options volume in NI is 13,000 calls and 290 puts. Typical volume is about 300 contracts. Mar 25 calls, which are 5% out-of-the-money and expiring in four weeks, are the most actives. 6,130 traded. Speculators are also active in NI April 25 calls and levels of implied volatility on the stock have surged 63% to 31.

Solar shares are hot Friday morning with a number of names up more than 10%, including the industry leader First Solar (NASDAQ:FSLR). Canadian Solar (NASDAQ:CSIQ) is one name seeing heavy stock and option volume, with a large buyer of March 4 calls in the 50-55 cent range to open a new position. Today’s total call volume sets a 52-week record, and the current 30-day at the money implied volatility of 119% is at the high end of it’s range, in the 94th percentile for the past year.

Bearish Flow

AT&T (NYSE:T) adds 4 cents to $30.04 and is one of 16 Dow stocks holding gains on another day of mixed trading Friday. An unusual options trade on the stock today is a 24,000-contract block of April 25 puts, bought for 10 cents per contract, to open. AT&T is up 9.6% from late-November lows and over the past 12 months has found some support around the $27 – $27.50 area. Shares of Ma Bell have not traded south of $25 since August 2010. April 25 puts on the stock have a delta of -.06, which indicates a 94 percent probability the contract will expire worthless. Volume is now almost 31,000 contracts against 8,320 in open interest.

Implied Volatility Mover

Frontier Communications (NASDAQ:FTR) adds a dime to $4.56 after earnings were a bit better than expected and Goldman raised its price target to $4.50 from $4. The firm maintains a neutral rating on the stock. Meanwhile, implied volatility in the options on the Stamford, CT, telcom has plummeted 35% to 54 amid selling of Feb and Mar 4 calls. The top trade is a 5,000-lot of Mar 4 calls at 65 cents when the market was 65 to 70 cents. Investors had been piling in to $4 calls on the stock in the days leading up to the report (see 1/27, 2/10, 2/13, and 2/16 color) and now positions are being liquidated after a three-day 12.1 percent rally in the share price. From 2/10 to today, open interest in FTR calls increased from 142K to 238K, or 67 percent. 13,000 calls and 2000 puts traded in the name so far today.

Unusual Volume Movers

Bullish flow detected in BRF Brasil Foods (NYSE:BRFS), with 2,925 calls trading, or 29x the recent average daily call volume in the name.

Bullish flow detected in Nokia (NYSE:NOK) with 26,287 calls trading, or 2x the recent average daily call volume in the name.

Bullish flow detected in Urban Outfitters (NASDAQ:URBN), with 5,144 calls trading, or 3x the recent average daily call volume in the name.

Meanwhile, unusually high options volume is being seen in Baidu (NASDAQ:BIDU), Gilead Sciences (NASDAQ:GILD) and Allstate (NYSE:ALL).

Source: Friday Options Recap