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Sentiment

Stock market averages are holding gains with help from Pending Home Sales numbers late-Thursday. The underlying tone of trading was cautious early after Spanish and Italian bond yields ticked higher and ongoing concerns about the debt crisis triggered choppy trading across the Eurozone. News that jobless claims declined by just 1,000 to 388K last week (consensus was 373K) also weighed on early trading. But the morning weakness was orderly and, as investors digested another heavy dose of earnings news, a report on Pending Home Sales was released at 10:00 EDT and showed a surprise uptick of 4.2 percent for March, which was much better than the .5 percent that was expected. Market averages were able to build modest gains into midday and the rally gathered some momentum in afternoon action. With 50 minutes left to trade, the Dow Jones Industrial Average is up 120 points and 9 points from session highs. The tech-heavy NASDAQ gained 22. CBOE Volatility Index (.VIX) is off .66 to 16.16 on a day of quiet action in the options market. 6.8 million calls and 5.5 million puts traded across the exchanges thus far.

Bullish Flow

Humana (NYSE:HUM) loses 42 cents to $88.31 and a 5000-lot of May 90 calls (sweep of 5028) traded for $1.35 per contract. It's an opening buyer, according to ISEE. Less than thirty minutes earlier, 579 traded for $1. The stock was at $86.97, or 1.5 percent below current levels, at the time. The weakness in the underlying today is probably related to Aetna's earnings miss. The bullish options order flow comes ahead of Humana's Apr 30 (before market) profit report. Shares fell 5.4 percent on 2/6 when earnings were last reported, but are up 3.8 percent since that time. May 90 calls are 1.9 percent out-of-the-money and have 2,761 in open interest. 6,400 contracts traded at a VWAP of $1.28 and the market is now $1.45 to $1.60.

Fusion Io (NYSE:FIO) is seeing bullish pre-earnings options flow today, after one strategist sold 2000 May 25 puts on the Salt Lake City-based medical device maker to buy 2000 May 30 - 33 call spreads. The position, for a 10-cent net debit, looks opening and seems to be a bold trade ahead of the company's profit report, due out after the closing bell. Shares tend to see relatively large daily post-earnings moves, including a 16 percent drop on 1/25, a 10.3 percent jump on 11/3 and a 10.5 percent rally on 8/5.

Bearish Flow

Implied volatility in the options on H&R Block (NYSE:HRB) is up sharply today after the company announced office closings and layoffs, and also lowered its 2012 earnings guidance. HRB is off $1.74 to $15 on heavy volume of 12.5 million shares. Options action includes 15,000 puts and 3,000 calls, which is 10X the daily average for the name. Jan 10 puts, which are 33.3 percent out-of-the-money after today's move, are the most actives. 4,625 traded. Jul 12 and 13 puts are busy as well and 30-day ATM implied vols rallied 36.5 percent to 34, as players in the options market don't seem convinced that the worst is yet over for shares of the tax preparation company.

Implied volatility Mover

Apple Computer (NASDAQ:AAPL) is off $7 to $603 and giving back some of yesterday's post-earnings surge. Weekly (4/27) options on the stock continue to see heavy trading. The 610s, which were precisely at-the-money at the close of trading yesterday, are the most actves in AAPL and also the most actively traded options contract across the entire market in the first 90 minutes of trading. More than 27,000 changed hands. Weekly out-of-the-money 605 puts and 615 calls are busy was well. In fact, the dozen most actives in Apple today are the soon-to-expire weekly contracts and more than half (54.6%) of the total options volume (340K) in Apple is Weekly options. Meanwhile, 30-day ATM implied volatility, which fell 28 percent to 31 yesterday, is easing to 30 today.

Source: Thursday Options Recap