Monday Options Recap

by: Frederic Ruffy


The major averages are holding modest losses on a slow news day Monday. With no earnings or economic data of importance to guide trading, the Dow Jones Industrial Average opened modest higher after falling more than 300 points Friday. Steady trading in Europe and modest gains in the euro helped support the market in early trading. However, trading had turned mixed by midday and another modest wave of selling pressure surfaced in afternoon action. Consequently, with 45 minutes left to trade, the Dow is down 35 points. The tech-heavy NASDAQ is down 28. Trading in the options market is on the light side, with 5.6 million calls and 5.3 million puts traded thus far.


The top trades so far today are SPYders (NYSEARCA:SPY) Jun 110 - Aug 115 call diagonal spread at 65 cents, 42000X on NYSE. It might roll a bullish position from June to August, or is perhaps an opening spread -- i.e. a bet that SPY will hold below $110 through the June expiration (11 days) and then rally beyond $115 through August. (1.07 collected on the June 110 calls.)

Cintas (NASDAQ:CTAS), the Cincinnati, OH business services company, is down 10 cents to $24.91 and options volume is 24X the average daily, driven by a block of 12K Jul 22.5 puts on the 20-cent bid. Looks like a premium writer opening a new positions. 13.1K now traded vs. zero in open interest.


Manitowoc (NYSE:MTW), the farm and construction machinery company, is down 52 cents to $10.55 and 4820 puts traded in the name so far today. The volume represents 16X the typical volume for midday and compares to 540 calls. The top trade is 1000 Jun 14 puts at $3.65 on ISE, which is an opening customer buyer, according to ISEE data. 3000 Jun 12 puts and 555 Jun 10 puts also changed hands. No headlines on the stock today. Shares are down more than 34 percent from the 52-week highs seen in late April and the relative weakness in shares along with the increasing put buying in the June contract seems to reflect underlying concerns about the short-term outlook for MTW. It comes ahead of a company presentation tomorrow (3:15) at a JP Morgan Diversified Industries Conference.

Implied Volatility

Bristol Myers Squibb (NYSE:BMY) is up $1.56 to $24 and 50K options traded in the name on news its experimental ipilimumab extended skin cancer patient survival rates and after Goldman Sachs upgraded the stock to Buy from Neutral. The top trade is 4000 Jun 22 puts sold at a dime each, which is possibly a closing trade. Meanwhile, June 24 calls are the most actives. 19.3K traded, including a block of 2121 at the 50-cent ask price and 2000 at 63 cents, also at the ask. Implied volatility is down about 5 percent to 35.

Unusual Volume

CVS (NYSE:CVS) options volume is 3.5X the average daily, with 58K contracts traded and call volume accounting for 69 percent of the action.

Delcath Systems (NASDAQ:DCTH) options activity is 4.5X the average daily after 50K contracts traded. Call volume accounts for 62 percent of the volume.

Autodesk (NASDAQ:ADSK) options volume is 5X the recent average daily, with 32K traded and put volume is 97 percent of the action.