Monday’s Bullish Trading
General Electric (GE) is up 12 cents to $23.05 and among 17 Dow stocks trading higher, as market breadth has turn marginally positive heading into the final hour of trading Monday. Interesting options trades on GE today include an 18000-contract block of January 30 calls that expire in 2015 for 52 cents per contract. An investor bought the call options, according to a source on the exchange floor. More than 20,000 traded. Open interest in the strike is 54,800 and most of that OI is from March 13 and 15, when buyers were paying 51 and 57 cents per contract to open positions. If so, today’s hefty block of long-dated 30 calls might add to the open interest and, if so, seems to be expressing a bullish view for GE through 2013-2014.
Bullish trading was also seen in Good Year (GT), Vodafone (VOD), and Riverbed Technology (RVBD).
Monday’s Bearish Trading
Commonwealth REIT (CWH) is seeing high put volume today. Shares of the office buildings Real Estate Investment Trust [REIT] are up 43 cents to $22.45. Meanwhile, 33,000 puts and 250 calls traded in the name. The top trades are part of a put calendar spread, in which the investor sold 14,000 May 20 puts on CWH at 55 cents and bought 14,000 June 20 puts for $1.40. If so, the spread, for 85 cents, might be expressing the view that CWH might drift lower, while holding above $20 through the May expiration, but then drop to less than $20 by mid-June.
Bearish trading was also seen in Ironwood Pharmaceuticals (IRWD), Zions Bancorp (ZION), and Seabridge Gold (SA).
Index Recap
Overall volumes are very light today, as some players are probably taking a wait-and-see approach after sour jobs data sent stocks skidding Friday and ahead of the earnings reporting season. The S&P 500 (.SPX) is up 4.34 points to 1557.62 and CBOE Volatility Index (.VIX) is down .38 to 13.54. Total volume in SPX, VIX and other cash indexes so far is 334K calls and 290K puts, or less than half the expected volume, according to Trade Alert data. Total volume across all products is 4.5 million calls and 4.1 million puts, which is running about 72 percent the normal levels.
Analyzing the ETF Market
WisdomTree India Earnings Fund (EPI) sees increasing options volume Monday. EPI, which represents ownership in 220 different companies that trade in India and that are also profitable (have earnings), are up 7 cents to $17.59. On the options front, 17,000 calls and 420 puts have traded on the ETF. The flow is heavily concentrated in July 19 calls and included a morning buyer of 15,000 contracts for an average of 26 cents per contract, according to a source on the exchange floor. It appears to be a new position and, in fact, will create the largest block of open interest in the name. If so, the activity seems to be expressing the view that EPI could be trading north of $19 by the July expiration.
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