Tuesday Options Recap

Includes: F, FSIN, SIRI, TRQ
by: Frederic Ruffy


Stock market averages were lower through midday and the selling intensified after minutes from the latest FOMC meeting were released. The early news flow was light and included just one sole economic stat - Factory Orders were up 1.3 percent in February and in-line with expectations. Losses across Eurozone equity markets, including a 1.6 percent decline in France's CAC 40 Index, weighed on Wall Street. However, the selling didn't pick up any momentum until 14:00 Eastern Time when minutes from the March meeting on monetary policy signaled a more hawkish stance from some FOMC members. The dollar moved to session highs. Stocks, gold, and bonds all traded lower on the news. Crude oil is now off $1.13 to $104.1 and gold gave up $47 to $1642.70 an ounce. However, trading has slowed again in the final hour. The Dow Jones Industrial Average is now down 85 points, but 47 points off session lows. The NASDAQ gave up 13.5 points. CBOE Volatility Index (.VIX) ticked up .43 to 16.07 amid light volumes in the options market. 6.5 million calls and 5.5 million puts traded across the exchanges so far.

Bullish Flow

SiriusXM (NASDAQ:SIRI) loses 6 cents to $2.34 in active trading of 25 million shares early-Tuesday and options on the satellite radio operator are busy as well. 8,690 alls and 520 puts traded on the stock so far. The top trade is a 1000-lot of Jan 3 calls for 13 cents per contract on ISE and is an opening position traded customer-to-customer, according to ISEE data. More than 4,000 now traded. Jun 2, Sep 2.5, and Jan 1.5 calls on SIRI are seeing early interest as well and levels of implied volatility moved up 5.5 percent to 44. The stock staged a two-day 8.6 percent rally Friday and Monday to test last year's 52-week highs of $2.44 amid a boardroom battle between Sirius and Liberty Media (NASDAQ:LMCA). Some attribute the strength in SIRI shares to hopes LMCA will takeover the company - which is perhaps driving the higher levels of call activity in the name Tuesday morning.

Calls on Ford Motor (NYSE:F) are active and implied volatility in the options on the automaker is easing after the company reported a 5 percent increase in March sales. In the first fifteen minutes of trading, shares are up a dime to $12.72 on the announcement and the early options flow in Ford includes 20,000 calls and 1,460 puts. Some investors might be liquidating positions in April 13 calls, as more than 9000 traded and 68 percent of the volume has been on the bid. Weekly $13 calls are the most actives. 9,165 traded and 65 percent hit at the ask. Meanwhile, levels of implied volatility have eased 5.5 percent to 25 now that the monthly numbers, which seem to have been released earlier than usual, have been reported.

Bearish Flow

Ivanhoe Mines (IVN) has come under pressure on increasing volume of 5.5 million shares after BMO Capital Markets downgraded the stock to Market Perform from OutPerform. Seems like the downgrade has had a significant impact on IVN, as the stock is off 8.6 percent and levels of implied volatility in the options rose 18 percent to 52 amid increasing interest in the in-the-money Jun 15 puts on the Vancouver-based miner. Morning trades include a buyer of 6400 contracts for $1.69 each on CBOE. Another 5000-lot traded for $1.65. 12,264 Jun 15 puts now traded on the stock. Shares are now down 18.5 percent year-to-date, but still above the 52-week lows of $12.11 seen in Oct 2011.

Implied volatility Mover

Fushi Copperweld (NASDAQ:FSIN) came under fire and hit a low of $5.76 in volatile morning action Tuesday. Shares of the Beijing-based electrical equipment company are now down 75 cents to $6.82 on volume of 1.6 million shares. Average daily volume in the stock is about 322,000. Meanwhile, 9,900 puts and 3,300 calls traded in FSIN. Players are showing the most interest in Apr 5 puts, which are still 26.7 percent out-of-the-money and expiring in 17 days. 3,240 traded. April 7.5 puts, May 5 puts. Jun 7.5 puts and Sep 7.5 calls on FSIN are also actively traded. Levels of implied volatility jumped 36 percent and now elevated at 142, but with no obvious headlines to explain the high volume and volatile action in FSIN today.