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Sentiment

Market action turned mixed late-Thursday despite a round of poor economic data. ADP reported this morning that the US economy added 133,000 private sector jobs this month. Economists were expecting 167,000. Separately, the Labor Department said that jobless claims increased by 10,000 last week to 383,000. A 5,000 decline was expected. The poor numbers hold some sway because monthly jobs numbers are slated for Friday morning. Elsewhere on the economic front, second quarter GDP improved to 1.9 percent annual rate, but that was .1 percent less than had been anticipated. Meanwhile, Chicago PMI, a gauge of regional manufacturing activity, fell to 52.7 in May, down 56.2 the month before. The rocket scientists were off the mark on that one too. The index was expected to increase to 57! The data weighed on an already jittery market, but trading was orderly across the Eurozone and end-of-month position squaring is probably a factor today as well. The Dow Jones Industrial Average has erased a triple digit loss and is up 34 points. The NASDAQ is down 5 points. With thirty minutes left to trade, CBOE Volatility Index (.VIX) is down .83 to 23.31 and well off session highs of 23.25. Trading in the options market is running about the typical levels, but continues to reflect the cautious underlying tone. 6.5 million calls and 6.7 million puts traded so far.

Bullish Flow

Apple (NASDAQ:AAPL) back to $470? One investor doesn't seem to think so. A July 450 - 470 - 500 put fly is sold on the stock this morning at $1.55, 1000X. Separately, a June 500 - 520 - 540 put butterfly is sold at 97 cents, 750X. If opening, the spreads offer their best payouts if Apple holds above the highest strike of the spread and all of the contracts expire worthless. The breakeven at expiration is equal to the highest strike minus the credit received. Beyond that, the flow in Apple today is also interesting because the ten most actives are Weekly options that expire after tomorrow. 575 and 580 calls are seeing the most volume. The stock is down $4 to $575.17 and overall volume in shares and options is running about the typical levels. 6.8 million shares of stock and 240K options in Apple so far (through 11:15 EDT).

Aetna (NYSE:AET) loses 36 cents to $41 and a June - July 43 call spread trades on the stock at $1.11, 10000X. Looks like a roll of a bullish position opened May 22 when more than 10,000 Jun 43 calls traded, including an 8,160-lot for 63 cents per contract. Shares are not much changed since that time, but time decay has taken its toll and 10,000 traded today at 38 cents. The strategist is now buying more time and initiated a new position in 10,000 July 32 calls for $1.49 per contract. Aetna was the subject of bullish trading in July options last week as well.

Bearish Flow

AT&T (NYSE:T) has added 45 cents to $34.28 and is one of 21 Dow stocks helping the industrial average to a modest 5-point gain. Shares are moving to new 52-week highs after a 13.4 percent year-to-date advance. An investor might be looking to hedge recent gains with a spread, as 12,500 Aug 32 puts were bought on T for 55 cents and 25,000 Aug 29 puts sold at an averge of 20.5 cents. The 1X2, for a 13-cent debit, traded on ISE, where ISEE reports an opening position for a customer account. It doesn't appear tied to stock and the spread will offer its best payoff if shares settle at $29 (~15,5%) at the August expiration (78 days).

Implied volatility Mover

United Rentals (NYSE:URI) is off $2.68 to $34 on no company news, but put volume is increasing in the name. 15 minutes into trading today, with the stock still north of $35, a Jun 31 - 35 put spread trades on the stock for $1.15, 1196X on ISE. A customer bought the spread, to open, according to ISEE data. 15 minutes later, with the stock down to $34, a Jun 30 - 34 put spread trades on URI for $1.40, 1050X on ISE. It's also an opening buyer. 30-day ATM vols are moving as well, up 16 percent to 77.5. Bearish flow comes as the company is presenting at a Keybanc Industrials and Automotive Conference Thursday.

Source: Thursday Options Recap