Thursday’s Bullish Trading
US Airways (LCC) is up 34 cents to $16.98 in active trading of 6.5 million shares after a judge approved the company’s merger with American. The two companies will create the world’s largest airliner and LCC shares are gaining altitude on the news. On the option front, trading is very uneven, as 30,000 calls and only 4,300 puts traded on US airways today. The top, or biggest, options trade in the name is a 13,500-contract block of June 18 calls for 74 cents per contract. An investor bought the calls, according to a source on the exchange floor, and the trade appears to be a new position. More than 15,000 Jun 18 calls now traded on LCC against 4,542 in open interest. Sep 15, Apr 17, and Jan[2015] 17 calls are the next most actives on the stock Thursday.
Bullish trading was also seen in MetroPCS (PCS), Juniper Networks (JNPR), and Diana Shipping (DSX).
Thursday’s Bearish Trading
Eli Lilly (LLY) shares are up 37 cents to $56.74 and helping to lead the healthcare sector to a strong first quarter’s end. SPDR Healthcare ETF (XLV) was up more than 14 percent since December 31 and as the best performer among the nine Select Sector Funds for the first quarter 2013. LLY, meanwhile, is notching multi-year highs and options on the pharmaceutical company are busy today. 15,000 puts and 2,215 puts so far. The largest trade was a block of 8,800 April 55 puts for 18 cents per contract on the International Securities Exchange. An investor bought the puts, to open, according to data from the all-electronic ISE. 11,560 April 55 puts now traded in LLY against 2,503 in open interest. Some investors are possibly initiating protective put positions on Eli Lilly to help hedge recent gains after the stock’s recent run higher.
Bearish trading was also seen in JC Penney (JCP), Kellogg (K), and Ctrip (CTRP).
Index Recap
The S&P 500 is climbing to new records, but volume and volatility are slowing to a crawl in the index market. The S&P is now up 4.60 points to 1,567.45 and CBOE Volatility Index (.VIX), which tracks the expected volatility priced into SPX options, is down .23 to 12.92. For the quarter, the S&P gained nearly 10 percent and VIX dropped almost 30 percent. Today, the last trading day of the first quarter, volumes are light, as many have already left to enjoy an extended weekend. 918K options traded across SPX, VIX and other cash indexes, which is only about 60 percent of the normal volume, according to Trade Alert data. VIX April 18 and 21 calls are the most actives index contacts of the day.
Analyzing the ETF Market
A large trade printed in the SPDR 500 Trust (SPY) Thursday afternoon. Shares, which are designed to mirror the action of the S&P 500, are up 36 cents to $156.55 and an investor bought the May 148 ? 146 put spread on SPY for 22 cents, 75000X. That is, they bought 75,000 May 148 puts on the ETF for 83 cents per contract and sold 75,000 May 146 puts at 61 cents. The trade is somewhat unusual because 148 puts on SPY are 5.5 percent out-of-the-money and are expiring in 50 days. An investor might have bought the spread to help hedge a stock portfolio, possibly replacing a similar position in March Quarterly options that are expiring today.
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