Monday Options Recap

Includes: GLD, HUM, MNST, SU
by: Frederic Ruffy


Stock market averages are lower following a round of uninspiring economic news Monday. Data released before the opening bell showed Personal Spending up .3 percent in March. Economists were expecting an increase of .5 percent. Incomes rose .4 percent and twice as much expected. Chicago PMI, released later, was down to 56.2 in April. Economists were expecting the gauge of regional manufacturing activity to fall to 60, from 62.2 the month before. Trading remains volatile across the Eurozone and equity markets suffered losses of more than 1.5 percent in France, Italy, and Spain. Trading in the commodities markets is also lackluster after crude slipped 15 cents to $104.78 and gold is now flat at $1165 an ounce. Meanwhile, the Dow Jones Industrial Average is off 38 points ahead of the next flood of earnings releases. Pfizer, ADM, and BP are among the names reporting before Tuesday's session. The NASDAQ lost 34 point Monday. CBOE Volatility Index (.VIX) is up 1 point to 17.32, but volumes are light today. 5.5 million calls and 4.6 million puts so far.

Bullish Flow

Suncor Energy (NYSE:SU) adds 46 cents $32.73 and recent options trades on the stock include a May 33 - 35 (1X2) call ratio spread for 14 cents, 5000X, electronically on AMEX. Looks like initiator bought to open ahead of this afternoon's earnings report. Shares of the Canadian integrated oil company have seen average daily post-earnings moves of 3.5 percent over the past four quarters -- including one win and three losses. If bought, today's 1X2 would offer its best payoff if the stock jumps on the earnings news and settles at $35 at the expiration, or a gain of 6.9 percent.

Call options on the Gold Trust (NYSEARCA:GLD) are actively traded after the metal erased early losses and GLD is now up 19 cents to $161.57. There's talk of an erroneous trade in the gold futures market early today, in which a sale of 7500 gold futures was being attributed to a "fat finger" mistake. GLD opened at $160.49 per share and .6 percent below Friday's close. It has since battled back to positive territory and options volume in the product is 147,000 calls and 24,000 puts through midday. The top trade is a morning buyer of 29,100 Sep 200 calls for 80 cents per contract. Another 9,000 traded for 80 cents on ISE and is an opening buyer, according to ISEE. 41,100 now Sep 200 calls on GLD traded against 35,584 in open interest. Separately, 18400 Dec 210 calls traded for $1.45 on ISE and was a closing buyer. A third noteworthy trade is a 15000-lot of Dec 190 calls for $2.78 on Philli when the market was $2.68 to $2.78. Overall, the flow seems bullish and possibly on the view that today's fat finger mistake offered an opportunity to buy upside calls on GLD.

Bearish Flow

Humana (NYSE:HUM) is getting hit on heavy volume after the healthcare company missed on earnings and posted in-line revenues for the most recent quarter. The stock is down $7.72 to $80.10 on volume of 5.5 million shares. Options activity is running 5.5X the daily average. 7,330 calls and 6,500 puts so far. One player seems to be bracing for further fallout this summer and apparently bought an Aug 75 - 85 bearish risk-reversal on Humana for 40 cents, 1410X, to open.

Implied volatility Mover

Monster Beverage (NASDAQ:MNST) shares rallied to $83.96 this morning on a Wall Street Journal article suggesting that Coke might be interested in the company. MNST is now up $7.08 to $72.61 and off 13.5 percent from session highs on heavy turnover of 7.2 million shares. Options action is picking up as well. 10,000 calls and 3,775 puts traded on the energy drink-maker. June 80 calls, which are about 11 percent OTM and expiring in 46 days, are the most actives. 5,080 traded. Jun 85 and May 80s are the next most actives and 30-day ATM vols have jumped 46 percent to 57. Also note that Coke (NYSE:KO) is down .8 percent and options on KO are busy as well, with 28,000 puts and 12,000 calls traded in the name so far.