Stock market averages are lower on disappointing economic news and poor earnings results Friday. News that China’s economy grew at a slower-than-expected 8.1 percent annual rate in the first quarter weighed on morning trading. Volatility across the Eurozone, including 2.4 percent declines in France’s CAC 40 Index and Germany’s DAX, added to jitters about the global economy. The euro lost .8 percent to 1.308 on the dollar after yields moves higher in Spain and Italy. Crude oil slipped 82 cents to $102.82 per barrel and gold took a $27 hit. The yellow metal now trades at $1653.5 an ounce. The day’s earnings didn’t offer much fodder for the bulls after Wells Fargo (WFC), JPMorgan (JPM) and Google (GOOG) all stumbled on the heels of their respective reports. Making matters worse, the Univ of Michigan reports its index of consumer sentiment is at 75.7 in mid-April, from 76.2 last month and below expectations of 76.1. The Dow Jones Industrial Average is showing some resilience given the headlines in the financial papers Friday. The Dow is now down 72 points and 38 points off session lows. The Nasdaq lost 35. CBOE Volatility Index (.VIX) gained 1.9 points to 19.09. Trading in the options market reflects the more defensive underlying tone. 5.8 million calls and 5.5 million puts traded across the exchanges so far.
Bullish Flow
Sodastream (SODA) is bubbling $1.41 higher to $36 in active trading of 1 million shares. Options volume on the stock is 2.5X the daily average, with 9,300 calls and 1,035 puts traded so far. The flow has been in smaller lots. The top trade is a 600-lot of May 40 calls for $1.35 on ISE and an opening buyer, according to ISEE. 1,595 now traded. Apr 35 calls are the most actives. 2,800 changed hands. Apr 32.5 and 37.5 calls are also busy and levels of implied volatility moved up 6 percent to 59. The stock is up in five of the past six trading sessions and added 11.9 percent during that time. However, SODA is still 24 percent below the levels seen on 2/28 before earnings were last reported. Now, for some reason, players seem to be taking positions in anticipation of gains in the shares in the days/weeks ahead.
Bearish Flow
Steel Dynamics (STLD) dips 36 cents to $13.81 on relatively light volume of 611K shares, but options on the steelmaker are busy today. 7,550 puts and 190 calls traded in the name so far, which is 4.5X the daily average. The flow is heavily traded in Apr 15 puts, which have traded 7400 contracts and includes multi-exchange sweeps of 1,230 contracts for $1.20 when the market was $1.15 to $1.20 and 700 for $1.15 when the market was $1.10 to $1.15. ISEE data is consistent with opening customer buyer and levels of implied volatility in STLD options moved up 7 percent to 43. Some sources have 4/16 (Monday) as an earnings release date, but that has not been confirmed. The company guided estimates lower on 3/16, but has seen post-earnings daily moves higher averaging 5 percent after the previous four profit reports. For whatever reason, today’s in-the-money put buyers seem to be anticipating additional weakness in the stock before next week’s expiration.
Implied Volatility Mover
iPath Short-term Futures Fund (VXX) adds 72 cents to $19.03 and one strategist bought 14,000 Apr 20 puts on the ETF for $1.59 per contract and possibly closed a position. 18,490 traded. Apr 19 puts are the most actives in the product. 25,900 traded (86 percent bid) and possibly seeing liquidating trades as well. VXX April 18 puts have traded 12,680 contracts. Total volume is 89,000 puts and 52,000 calls, with 38.5 percent of the call volume in the expiring weeklys and 76.4 percent of the put volume in the April options, which expire at the end of next week. VXX had suffered an 8-week 40 percent losing skid prior to the month of April, but has rebounded for a 12.2 percent month-to-date gain over the past nine days.
Unusual Volume Movers
Bullish flow detected in Yum Brands (YUM), with 7733 calls trading, or 4x the recent avg daily call volume in the name.
Bullish flow detected in Coventry Healthcare (CVH), with 5340 calls trading, or 4x the recent avg daily call volume in the name.
Bearish activity detected in Viacom (VIAB), with 4052 puts trading, or 3x the recent avg daily put volume in the name.
High options volume is being seen in Google (GOOG), Illumina (ILMN), and Gilead Sciences (GILD).
