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Sentiment

Action was mixed into midday, but stock market averages are holding modest gains heading into the final hour Tuesday. The Case Shiller Price Index, released early, was better than expected at -1.9 percent, but had no impact on opening trading. Sluggish action continued after the latest Consumer Confidence data showed a decline to 62 for June, from 64.4 in May and below expectations of 64. The underlying tone of trading remained cautious heading into midday on media reports that German Chancellor Angela Merkel said Europe won’t have shared liability on debt. The euro fell to session lows, but is now little changed at 1.249 on the buck. Crude oil erased its early losses and gained 13 cents to $79.34. There also seems to be a modest move out of safe haven investments. Gold lost $14.5 to $1574 an ounce and the benchmark ten-year Treasury is off 8/32nd, bringing its yield to 1.63 percent. The Dow Jones Industrial Average is now up 60 points and 10 points from session highs. The tech-heavy NASDAQ added 20. VIX slipped below the 20 “psyche level” and is off .76 to 19.62, amid very light volumes in the options market.4.9 million calls and 4.4 million puts so far.

Bullish Flow

MGM (MGM) has moved out of negative territory and is now up a penny to $10.50 Tuesday morning. Options volume on the casino operator is about 14,000 calls and 1,100 puts. The top trade is a 4000-lot of Sep 14 calls for 8 cents when the market was 7 to 8 cents. 10,000 now traded. Sep 12 calls are the second most active. 2,300 contracts changed hands. 30-day ATM vols are up 2.5 percent to 43. The flow seems bullish this morning, and seems to express confidence in a rebound after three-month 27.5 percent decline in MGM shares.

Bearish Flow

Market Vector Mining Fund (GDX) slips 65 cents to $44.51 and recent trades on the ETF include an Aug 42.5 - 47 bearish risk-reversal for 17 cents, 10000X on NYSE-ARCA. The investor sold calls to buy puts and open a new position. The miners are down after gold slipped $14.5 to $1574 an ounce. The bearish combo doesn't look tied to stock and appears to be in anticipation of a move lower in the underlying shares through the August expiration (52 days).

Implied volatility Mover

MBIA (MBI) adds 30 cents to $10.14 and recent trades on the mortgage insurance company include 1246 Aug 10 calls for 89 cents when the market was 88 to 89 cents. 5,358 now traded against 20,203. Possibly closing activity in the stock today. Aug 10s are now in-the-money and 30-day ATM vols in MBI are falling 11.5 percent to 50.5.

Unusual Volume Movers

Bullish flow detected in First Horizon National (FHN), with 2663 calls trading, or 18x the recent average daily call volume in the name.

Bullish flow detected in Patterson UTI Energy (PTEN), with 5168 calls trading, or 18x the recent average daily call volume in the name.

Bearish activity detected in Analog Devices (ADI), with 3606 puts trading, or 11x the recent average daily put volume in the name.

High options volume is being seen in Apollo Group (APOL), Arena Pharmaceuticals (ARNA), and Nokia (NOK).

Source: Tuesday Options Recap