Options Summary: Bulls Hanging On!

The market was choppy but able to hold onto some gains into the close which was impressive in the face of two short sale attempts into the close. Banks showed profitability in the first two months of this year with both Citigroup (C) & JP Morgan (JPM) positive. Watch out for Treasury Secretary Geithner who will be speaking tomorrow on ‘10 budget.

The G20 is also meeting this week to discuss how to restart economic growth. There are no earnings movers on the calendar for Tuesday but advance retail sales for February comes out tomorrow. See you Tuesday.

After Hours

Stocks held modest gains in a day of relatively quiet trading Wednesday. After rallying 379 points Tuesday, the Dow Jones Industrial Average (^DJI) traded in a 147-point range and closed the day up 4 points. 15 Dow stocks closed higher. 15 finished lower. With no economic data or earnings releases of broad market significance, investors found very little new information to guide the market one way or the other.

Crude oil prices did get some interest after prices fell $2.71 to $43 a barrel on bearish weekly inventory data. In the options market, trading seemed to reflect the improved sentiment over the past two days.

The CBOE Volatility Index (^VIX), which fell 5.31 to 44.37 Tuesday, lost another .85 to 43.52. Approximately 6.1 million puts and 9.5 million calls traded on the options exchanges. This week’s first economic stats of significance, retail sales and jobless claims, are due out Thursday morning.

Bullish

Axsys Technologies (AXYS) saw heavy trading Wednesday after Reuters reported that the company is putting itself up for sale. The maker of surveillance equipment is looking for $60 per share. The stock finished $8.90 to $36.27 and options activity surged to 31 times the normal levels. 8,800 calls and 1,700 puts traded, as some bullish investors snapped March calls at the $35 and $40 strikes. Bullish trading was also seen in Freeport McMoran (FCX), Sun Microsystems (JAVA), and CF Industries (CF).

Bearish

Bearish traders surfaced in Vulcan Materials (VMC) Wednesday. Shares finished up 57 cents to $36.92 and total options activity rose to 3 times the normal levels. Most of the activity was in the May 35, May 30, April 35 and April 30 puts. All four traded 3000 times. It appears that traders were buying bearish spreads in both expiration months (buying 35 puts and selling 30 puts) and bracing for a possible decline in the share price over the next month or two. Bearish trading also surfaced in Vornado Realty (VNO), Johnson Controls (JCI), and Marriott (MAR).

Index Trading

The US Dollar Settled Euro Index (.XDE) saw increasing volume as the euro bounced back to life Wednesday. The index, which tracks the EU/USD currency pair, rose $1.82 to $128.53 and options activity rose to 6 times the normal levels. A lot of the activity was in the April 125s and seemed to include a lot of put selling. Some investors were possibly closing out bearish positions as the index ran higher Wednesday. The S&P 500 Index (^GSPC), the CBOE Volatility Index, and the Russell 2000 (^RUT) also had among the more actively traded contracts. Approximately 547,000 puts and 547,000 calls traded across all products.

ETF Trading

Calls on the SPDR Homebuilders Trust (XHB) were active for a second time in three trading sessions. Monday, volume spiked as investors aggressively bought March and April 9 calls. Wednesday, with shares near $9.30 and 12.2 percent above Monday’s levels, the bullish trading continued. This time, the focus shifted to the June 12 calls, with more than 90,000 traded, or about 16 times the existing open interest. Outside of that, the Powershares QQQ (QQQQ), the Select Sector Utilities (XLU), and the Select Sector Financials (XLF) had among the most actively-traded securities. Approximately 2.0 million puts and 3.1 million calls traded across all exchange traded funds.

Subscribe by RSS Subscribe by Email