Tuesday Options Recap

by: Frederic Ruffy


Stock market averages are holding gains with help from International news Tuesday. Germany's DAX and France's CAC 40 both rose about 1.25 percent after pro-bailout parties gained some support in Greece. Unconfirmed reports that China's officials are leaning towards looser monetary policy also helped set the table for steady trading on Wall Street and offset a disappointing read on Consumer Confidence; which fell to 64.9 in May, from 68.7 in April and well below expectations of 69.5. Still, the Dow Jones Industrial Average had scored a triple digit gain heading into midday with help from cyclical names like Caterpillar (NYSE:CAT) and United Technologies (NYSE:UTX). Since then, the industrials have come off session highs and the Dow is up 90 points. The NASDAQ gained 25. CBOE Volatility Index (.VIX) ticked up .06 to 21.82, on light volume to start the week. 5.1 million calls and 5 million puts traded so far.

Bullish Flow

Omnivision Tech (NASDAQ:OVTI) adds 95 cents to $15.14 in active trading of 2.1 million shares Tuesday morning after Digitimes reported the company is believed to have secured orders for iPads and iPhones. Options on the Santa Clara, CA semiconductor image device-maker are busy as well. 7,760 calls and 1,940 puts traded on the stock so far. July 17 calls, which are 12.3 percent OTM and expiring in 52 days, are the most actives. 2,135 changed hands. Jun 13 puts, Jun 15 calls, Jun 16 calls, and Jun 18 calls are also seeing interest and 30-day ATM vols moved up 7.5 percent to 82.5. The company will also release earnings Wednesday afternoon.

Intel (NASDAQ:INTC) adds 12 cents to $25.95 and is one of 23 Dow stocks holding gains through midday. An interesting options trade on the chipmaker today is a 43,000-contract block of Aug 28 calls bought for 47 cents per contract, to open. The block, which represents $120 million in notional value, is tied to 900K shares at $26.13 and is possibly a bet that Intel will, by mid-August, recapture the $29.12 per share 52-week high set less than one month ago. Delta of the INTC Aug 28 calls is .25 and the contract is 7.9 percent OTM.

Bearish Flow

An hour into the trading day Facebook (NASDAQ:FB) options were second most active after Apple (NASDAQ:AAPL), with nearly 100,000 contracts trading and puts leading calls 5:4 as shares flirt with the $30 level. June 30 puts are the most active contract with more than 10K on the tape at an average of $1.45. Largest trade was a bearish 3050-lot put spread on the PHLX just after 10 am in which a customer paid $2.95 for the July 32-25 put spread. Implied volatility opened near 66% and is currently about 60%. Current volume implies FB may hit 400,000 contracts today, making it the best first-day listing in listed options history.

Implied volatility Mover

James River Coal (JRCC) gives up early gains and is down 10 cents to $3 despite positive commentary from Goldman Sachs about the coal sector today. Market Vectors Coal Fund (NYSEARCA:KOL) is up 3.2 percent. However, JRCC, which has already been smoked for an 86.9 percent loss since a year ago, is not participating and it appears that some investors are anticipating additional weakness in the stock. 5,100 puts and 425 calls traded in the name. The flow includes a multi-exchange sweep of 878 Dec 2 puts at the 70-cent asking price and 642 Dec 3 puts for $1.25 when the market was $1.15 to $1.25. Sep 3 and Jun 3 puts are the most actives, with 1541 and 1033 traded, respectively. 30-day implied volatility is up 12 percent and elevated at 135.

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