Stocks moved broadly lower early Monday on the heels of disappointing jobs data, but market averages have pared some of the early losses in late-day action. Although most financial markets were closed in the US, the Labor Department released its monthly jobs report on Good Friday and the headline number showed the US economy adding 120K payrolls in March. Economists were looking for an increase of 200K. The data overshadowed the day’s other news, which included a $1.06 billion patent-sale deal between AOL (AOL) and Microsoft (MSFT). European markets are closed and action in the commodities pits is mixed. While crude oil lost 82 cents to $102.50 per barrel, gold is up $15 to $1645 an ounce. The Dow Jones Industrial Average is now down 92 points, but 64 points from session lows. The Nasdaq is off 25 points. CBOE Volatility Index (.VIX) made a morning run towards 19 and was 1.29 to 17.99. Overall options activity is picking up from the slow levels seen last week. 6 million calls and 6 million puts traded across the exchanges so far.
Cisco (CSCO) loses 15 cents to $20.07 and a Jun 19 – 21 bullish risk-reversal is bought on the stock for 3 cents, 10000X on PHLX. A source on the floor confirms that puts were sold to buy calls. It appears to be a new position and similar to activity seen in late-March, which included Jun 19 – 22 combos and Oct 17 – 22 risk-reversals. Shares are down today and, after notching 52-week highs of $21.3 on Apr 2, are on a four-day 5.2 percent losing skid. Today’s risk-reversal seems to express confidence that the stock can recoup the losses and continue moving to new highs through mid-June.
Intel (INTC) loses 29 cents to $27.78 and a Jul 26 – 29 bullish risk-reversal trades on the chipmaker at 7 cents, 10700X on PHLX. A source on the floor confirms that puts were sold to buy calls and, although open interest is sufficient to cover, this appears to be new positioning, as the historical data don’t show any similar combos in the past. If so, it’s very similar to a trade initiated in Cisco today and seems to express confidence in shares of the world’s largest chipmaker. INTC notched a 52-week high of $28.45 intraday on the last day of March and is down 2.4 percent month-to-date.
Supervalu (SVU) touches a 52-week low early Monday, but is now up a nickel to $5.18. Recent options trades on the stock include Oct 4 - Jan 5 puts spread, sold at 62.5 cents, 2400X. It might roll a position from Jan to Oct and down one strike price after a 51 percent plunge in the underlying during the past 11 months. The adjustment is being made ahead of the company's earnings release, which is due out tomorrow morning. SVU saw heavy trading Friday as well, which created 19,000 contracts of new open interest (9369 calls and 9941 puts). Implied vols in the options on the stock are up another 3.5 percent to 87 today and new 52-week highs. Shares tumbled 12.5 percent on Jan 11 when earnings were last reported.
Implied Volatility Mover
Implied volatility in the options on Fushi Copperweld (FSIN) remains elevated, as high put volume continues in the Chinese electrical equipment company. 6,930 puts and 510 call traded on the stock so far today, which is 2.5X the daily average. Shares are down 31 cents to $6.20 and the April 5 puts, which are more than 20 percent out-of-the-money and expiring in 11 days, are the most actives. 2520 traded. April 2.5, 7.5 and 10 puts on FSIN are seeing interest as well and levels of implied volatility moved up 26 percent to 182. The stock is on a four-day 18 percent losing skid and, like last week, today’s options order flow seems to reflect concerns about additional losses in FSIN shares over the next two weeks.
Unusual Volume Movers
Bearish activity detected in Array BioPharma (ARRY), with 3750 puts trading, or 27x the recent average daily put volume in the name.
Bullish flow detected in E Commerce China Dangdang (DANG), with 10232 calls trading, or 2x the recent average daily call volume in the name.
Bearish activity detected in Shutterfly (SFLY), with 5246 puts trading, or 12x the recent average daily put volume in the name.