Monday’s Bullish Trading
Viacom (VIAB), the New York-based entertainment, dropped $2.48 to $64.02 and options volume on the stock was 8X the daily average. Roughly 16,000 calls and 600 puts traded on Viacom today. Early trades included smaller lots of May 70 calls traded for 65 and 70 cents per contract, and then a block of 8,586 May 70 calls traded on the stock for 70 cents per contract when the market was 60 to 70 cents. At the end of the day, 12,195 May 70 calls traded on VIAB against 337 in open interest. May 67.5 calls were the second most active in the name, after 2,877 contracts changed hands. The stock was down and there was no obvious news to explain the increased call activity. Some investors might be positioning for heightened volatility in VIAB ahead of earnings. The company is due to release results in two weeks.
Bullish trading was also seen in Rambus (RMBS), Mittal Steel (MT), and Yokou (YOKU).
Monday’s Bearish Trading
Cypress Semiconductor (CY) drops 33 cents to $10.90 in active trading of 4.3 million shares and options volume on the chipmaker was 3X the daily average Monday. About 10,000 puts and 1,500 calls traded on the stock. April 10 puts were the most active in CY after 8,820 contracts traded against 2,090 in open interest. The top trade was a 5000-contract block for 9 cents per contract when the market was 0 to 10 cents. April 10 puts on CY are 8.3 percent out-of-the-money and expire in four days. The company is due to report earnings Wednesday and some investors are possibly initiating short-term protective put positions in the April 10s on CY ahead of the report.
Bearish trading was also seen in Cemex (CX), Applied Materials (AMAT), and Office Depot (ODP).
Index Recap
Overall options volume was very heavy and implied volatility moved broadly higher across the market Monday. Roughly 23 million contracts traded across all the exchange, according to Trade Alert data, and that’s more than double the volume seen a week ago. Last Monday was one of the slowest of the year and today was one of the busiest. Meanwhile, CBOE Volatility Index (.VIX), which tracks the expected or implied volatility of S&P 500 Index options, was up 5.04 points to 17.10! NASDAQ Volatility Index (.VXN) gained 3.25 to 17.13 and Dow Jones Volatility Index (.VXD) rallied 3.87 points to 14.98.
Analyzing the ETF Market
SPDR Gold Fund (GLD) saw very heavy trading after suffering another steep loss Monday. GLD, which is an exchange-traded fund that represents ownership in gold stored in bank vaults, was down $12.64 to $131.31 on big volume of 92.5 million shares and options volume was 4.5X the daily average. 401,000 calls and 429,000 puts traded in GLD. Meanwhile, implied volatility in options on the ETF, as measured by GVZ, surged 13.16 points to 34.48! April 130 puts and June 150 calls were the most active in GLD Monday.
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