Tuesday’s Bullish Trading
Microsoft (MSFT) helped lift both the Dow Jones Industrial Average and the NASDAQ after rallying 3.7 percent Tuesday. The strength was noteworthy and seemed to occur on no immediate news. Nevertheless, the stock was up $1.02 to $29.61, best gainer in the Dow, in very brisk trading of 75.4 million shares. Meanwhile, 216,000 calls and 102,000 puts traded in Microsoft today which is 4.5X the daily average for the software giant. April 30 calls, which are now 39 cents out-of-the-money and expiring at the end of next week, were the most active. 46,860 contracts traded. May 30 and April 29 calls on MSFT saw busy trading today as well.
Bullish trading was also seen in Goodyear (GT), Nuance Communications (NUAN), and DELL.
Tuesday’s Bearish Trading
A couple of the medical device-makers saw bearish trading Tuesday. Boston Scientific (BSX) was up 1 cent to $7.82 and a 10,000-contract block of January 10 calls traded on the stock at 22 cents per contract on the International Securities Exchange. An investor sold the calls, to open, according to data from the ISE and seems to see limited upside in the stock through early-2014 (although a move to $10 would represent a significant move). Meanwhile, St. Jude Medical (STJ) was off 73 cents to $41.21 and options volume on the stock was 3,800 puts/1,030 calls. April 40 puts were the most active. 2,300 traded against 1,730 in open interest. The stock was downgraded at a brokerage firm today, ahead of an April 17th earnings report.
Bearish trading was also seen in Pulte Group (PHM), Texas Instruments (TXN), and Synovus (SNV).
Index Recap
Trading activity picked up a bit in the CBOE Volatility Index (.VIX) pit on the Chicago Board Options Exchange Tuesday afternoon. VIX, which tracks the expected or implied volatility priced into S&P 500 Index options, was off .25 to 12.84 after the S&P 500 gained 5.54 points to 1,568.61. Meanwhile, on the options front, 721,000 calls and 123,000 puts traded on the volatility index. April 17, April 18, April 27 and April 28 calls were the most actives and all traded more than 110,000 contracts, as one big investor appeared to be exiting substantial April call spreads on the volatility index today. April options on VIX expire a week from tomorrow. The standard expiration for April options on most other products is at the end of next week.
Analyzing the ETF Market
Options on the iShares Silver Fund (SLV) saw interest Tuesday amid strength in the metal. Silver prices were up 77 cents to $27.91 and SLV, which is the ETF that represents ownership in the metal, was up 71 cents to $27.03 in active trading of 11.5 million shares. Meanwhile, 144,000 calls and 60,000 puts traded on the silver fund today. January 40 calls were the most active. More than 34,577 contracts changed hands, including a 32000-contract block for 21 cents when the market was 19 to 21 cents. Open interest in that strike is 272,046 contracts and by far the largest block of OI in the silver ETF. So, some of today’s activity might have been closing, as investors seized the strength in silver to liquidate positions in Jan 40 calls on SLV.
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