Intra-Day Significant Options Activity

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ETF/Indices Mentioned: BKX, IYH, SMH, SOX, XLK, XLV

Stocks Mentioned: CCL, GM, HPQ, NDE, NFI, PNRA, QCOM, RCL, RRI, SNV, TLAB 

ETF/INDICES
In the PHLX KBW Banking Index (BKX, 109.40, -1.23%) investors sold March 115 puts, closing, versus buying May 110 puts, opening, in a spread approximately 5,000 times.  In extending their long put position, these investors convey a continued cautious stance heading into May expiration (5/19/07).  In comparison, the BKX is down roughly 4.3% since Monday of last week versus the SPX (S&P 500 Index) which is down roughly 1.36%. 

In both the PHLX Semi Index (SOX, 466.60, -1.0%) and the Semi Holdrs Trust (SMH, 33.82, -1.4%) there is volatility buying in multiple months. In the SOX this morning opening investors bought 500 April 500 calls for $4.50 after buying 1000 calls for $6.20 on Monday. In the SMH, investors bought at least 45,000 March 35 calls in the past two days including 25,000 calls which traded up to $0.09 today.  Also in the SMH, participants bought 20,000 May 32.5 puts, most for $0.79.  The SMH March calls are available to trade up until Friday's closing bell.

Shortly after the opening bell, several Healthcare based products saw an influx of April put buyers in seemingly cautious trading. In the Healthcare SPDR (XLV, 32.96, -0.36%) opening investors bought 2,500 April 33 (.44d) puts, versus an average daily volume of fewer than 400 contracts a session. 

In the iShares US Healthcare Index (IYH, 65.18, -0.69%) opening investors bought 1,200 April 65 (.38d) puts, versus an average daily volume of fewer than 50 contracts a session.

In the rarely traded Technology SPDR (XLK, 22.60, -0.75%) opening investors bought 3,500 April 22 (.26d) puts paying $0.29.  These investors are positioning increased volatility with a downside bias, likely in an effort to protect long delta positions.  We have also seen opening April put buyers today in HPQ, an XLK component

AUTO MANUFACTURING
June volatility is bid today in General Motors Corp (GM, 29.68, -2.75%) implying expectations for increased movement in the coming months.  In separate trading investors bought 14,000 June 30 (.60d) calls paying from $2.70 up to $2.90, and bought ~10,000 June 25 (.20d) puts paying from $0.80 up to $0.90.  The buyers pushed June implied volatility higher by about 4pts to 44%. 

This morning, GM reported 4Q EPS, excluding a variety of special items of $0.32 vs. $1.19 consensus.  GM North America auto unit posted an adjusted net loss of $14 mln compared to an adjusted loss of $1.4 bln in the same quarter of 2005.  GM noted that it cut structural costs in North America by $6.8 bln in 2006, ahead of its target of $6 bln in cost cutting, and reaffirmed that it remains on track to deliver on its previously announced target of $9 bln in annual structural cost savings in 2007.  GM closed on its previously announced sale of a 51% stake sale in GMAC on Nov. 30, 2006.  During the conference call, GM noted that it sees improved earnings for 2007, but also potential volatility due to mark-to-market requirements for certain derivative, and does expect improved but still negative full year cash flow.

COMPUTERS
In Hewlett-Packard Co. (HPQ, 39.37, -0.48%) opening investors bought approximately 9,000 April 40 (.51d) puts paying $1.15.  Getting long downside at-the-money volatility, these investors could either be aggressively protecting long stock positions or speculating on a pull back in the shares heading into April expiration (4/21/07).  HPQ is estimated to report 2Q earnings on 5/16/07.

CRUISE LINES
We are seeing cautious March put buyers in both Carnival Corp (CCL, 44.54, -1.66%) and Royal Caribbean Cruises Ltd (RCL, 40.42, -1.49%) ahead of this Friday's earnings in CCL. Specifically, opening CCL investors bought 1,400 March 45 (.50d) puts and opening RCL investors bought 3,500 March 40 (.30d) puts. Earlier this week CCL investors were buyers of around 3,000 March 45 puts and the March 47.5 calls in smaller size. Additionally, over the couple weeks we have highlighted fairly consistent put buying in RCL in both the June and September time frames. 

ENERGY - UTILITIES
With Reliant Energy Inc. (RRI, 18.45, +1.37%) trading at approximately $18.40, opening investors bought approximately 2,000 August 20 (.65d) puts paying $2.40.  This in-the-money put buying suggests a bearish sentiment heading into August expiration.

FINANCIAL - BANKING
In seldom traded Synovus Financial Corp. (SNV, 31.47, -1.41%) options, opening investors bought approximately 1,000 January08 30 (.31d) puts, versus an average daily volume of fewer than 200 contracts a session.  These cautious investors are positioning for increased volatility, possibly in an effort to protect long stock positions.

FINANCIALS - MORTGAGE LENDERS
In both Indymac Bancorp (NDE, 26.52, -1.70%) and Novastar Financial (NFI, 3.67, +7.00%) order flow is mixed today including put buyers and call sellers who likely think further downside is feasible. In NDE this morning, we saw buyers of roughly 3,500 July 35 (.68d) puts while separately closing investors sold 1,500 April 25 (.34d) puts. In NFI soon after the opening bell, investors sold approximately 3,000 June 5 puts, but most recently participants bought puts and sold calls in the June 5 combo, 1,300 times.

RESTAURANT
In Panera Bread Co. (PNRA, 58.74, -1.21%) this week opening investors have bought roughly 5,000 May 60 (.51d) calls, with 3,000 trading today.  The consistent nature of the call buying suggests a bullish bias with investors positioning for upside heading into May expiration (5/19/07).  PNRA is estimated to report earnings on 4/25/07.

TELECOMMUNICATIONS
In Tellabs Inc (TLAB, 9.79, -0.71%) opening investors sold 10,000 September 10 straddles at $2.00. Anticipating decreased implied volatility in the options, they will win to the trade if the stock stays between $8 and $12 (10 strike +/- $2 premium). In additional TLAB trading recently, we have seen September and January08 12.5 call buyers. 

WIRELESS
In Qualcomm (QCOM, 42.96, +2.7%) today we are seeing closing sellers of at-the-money calls and opening buyers of upside calls in multiple months.  Participants sold March 42.5 and April 45 calls today (about 15,000 times each) while separately we saw an opening buyer of 20,000 July 50 calls, paying $1.00. In addition there was a buyer of 7,500 July / October 45 call calendars and smaller buyers of April 47.5 and 50 calls.

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