Friday Options Recap

by: Frederic Ruffy

Stock market averages are rangebound and volumes have been light, as many of the “pros” have already squared the books after a strong first quarter and are now sidelined until the start of the second. The day’s economic news was decidedly mixed and had little market impact. While Personal Spending rose .8 percent in February and .2 percent less than expected, incomes increased by just .2 percent and .1 percent less than expected. Chicago PMI fell to 62.2 in March, from 64 and below expectations of 63. But the UofMichigan Consumer Sentiment Index finished the month at 76.2, from 74.3 and better than the 74.3 that was expected. Meanwhile, major averages drifted lower in Hong Kong and Tokyo, but 1 percent gains were seen across the Eurozone. Crude oil is trying to battle back from days of big losses and was recently up 64 cents to $103.42 per barrel. Gold gained $15.60 to $1667.8 an ounce. On Wall Street, the Dow Jones Industrial Average is up 66 points and has added 8.1 percent for the quarter. The Nasdaq edged up 5 points through afternoon trading Friday. CBOE Volatility Index (.VIX) is off .06 to 15.42 and down 34.1 percent during the past three months. Trading in the options market is slowing. 5.4 million calls and 5 million puts traded across the exchanges.

Bullish Flow

SiriusXM (NASDAQ:SIRI) seizes 8 cents to $2.29 on volume of 21.5 million shares, which is more than double the typical activity for the first hour of trading. Meanwhile, 16,000 calls and 304 puts traded on the stock. The top trade is a 9600-lot of Jan 2 calls for 49 cents on PHLX when the market was 44 to 49 cents. 10,209 now traded against 137,400 in open interest, which is by far the largest open position in the satellite radio operator. Apr 2.5. May 2.5. and Jun 2 calls on SIRI are seeing early interest as well and levels of implied volatility edged up 4.5 percent to 40. No news. The stock is set to end of the first quarter with a 26.4 percent advance and today's order flow seems to reflect expectations for additional gains in the second.

Liz Claiborne (LIZ) sees a spike to $1.86 to $13.69 on two times normal share volume of 5 million on a WSJ story about the company shopping itself to private equity for $20 per share. 2,700 options traded on the stock, which is not unusual, but the flow is lopsided -- with 2,440 calls and 225 puts traded, a ratio of more than ten-to-one. Apr 13, 14, and 15 calls are the most actives and levels of implied volatility moved up 60 percent to 75!

Bearish Flow

RadioShack (NYSE:RSH) is off 10 cents to $6.21 and set to close the first quarter with a loss of 36 percent. The stock suffered a one-day 30 percent skid on January 31 after lowering its fourth quarter profit forecast and has failed to stage any meaningful rally attempts since that time. Today's options order flow seems to reflect concerns that the stock will fall below the intraday 52-week lows of $6.14 set yesterday and south of $6 per share, as Apr and May 6 puts are the most actives in the electronics retailer today. The flow includes a multi-exchange sweep of 1,133 May 6 puts for 43 cents per contract. 2,644 now traded. Another 1,760 Apr 6 puts changed hands. ISEE data is consistent with opening buyers of both contracts, and levels of implied volatility in RadioShack options moved up 10 percent to 51.

Implied Volatility Mover

Six of the ten most active contracts in early trading Friday morning are RIM (RIMM) options. For the first time in over a year, shares of the BlackBerry-maker are up on profit news. The average post-earnings loss over the previous four quarters was 15.7 percent, including a 19 percent tumble on 9/16 and a 21.5 percent swoon on 6/17. Today, however, RIMM shareholders are enjoying a 4.4 percent post-earnings move higher and expiring Weekly $15 calls are the most actives, with 9850 traded and about half the volume traded on the Bid. Apr 13 puts, Weekly 14 puts, Apr 15 calls, Weekly 14 calls and next week’s 15 calls are seeing interest as well and levels of implied volatility in RIM options moved down 39 percent to 50; which is the lows of the year, but still well above the 52-week lows of 31 seen in April 2011.

Unusual Volume Movers

Bullish flow detected in Family Dollar Stores (NYSE:FDO), with 3683 calls trading, or 5x the recent avg daily call volume in the name.

Bullish flow detected in Boyd Gaming (NYSE:BYD), with 3212 calls trading, or 10x the recent avg daily call volume in the name

Bearish activity detected in Renren (NYSE:RENN), with 3850 puts trading, or 2x the recent avg daily put volume in the name.

Increasing options action is also being seen in TEVA, Vivus Pharmaceuticals (NASDAQ:VVUS), and Nvidia (NASDAQ:NVDA).