Wednesday’s Bullish Trading
Pfizer (PFE) is up 2.9 percent to $29.95 and among the top percentage gainers in the Dow Jones Industrial Average late-Wednesday. The stock opened higher and is seeing brisk trading of 32.5 million shares after the FDA designated the company’s Palbociclib with breakthrough therapy status. On the options front, trading in Pfizer is very active as well. 69,000 calls and 8,700 puts so far. The top trade is a 10,000-contract block of April 30 calls for 18 cents per contract. An investor bought the calls, according to a source on the exchange floor, and appears to be opening a position. 24,670 contracts now traded. This call option is 5 cents out-of-the-money and will expire at the end of next week. June and September 31 calls are the next most actives in Pfizer today.
Bullish trading was also seen in MBIA (MBI), Analog Devices (ADI), and Viacom (VIAB).
Wednesday’s Bearish Trading
Microsoft (MSFT) saw noteworthy action in the second half of trading. As noted in the midday report, June 31 and April 30 calls on MSFT were heavily traded in the morning session. Later, an impressive trade printed when one investor bought a 55,000-contract block of April 30 puts on MSFT for 51 cents per contract. Volume in that option is now 81,440 against 23,503 in open interest. Total volume in the software-maker is 293,000 calls and 223,000 puts. Bulls and bears appear to be battling over Microsoft and the high options volumes come the week before the company reports earnings. The company reports earnings after the close next Thursday, the day before expiration Friday.
Bearish trading was also seen in Leggett & Platt (LEG), ADT, and Sysco (SYY).
Index Recap
Implied volatility is broadly lower across the options market, as stock market averages are moving sharply higher into the close. The S&P 500 (.SPX) is up 19.41 points to 1,588.02 and poised to close at record levels. CBOE Volatility Index (.VIX), which tracks the expected or implied volatility priced into SPX options, has eased back .27 to 12.57. The NASDAQ Volatility Index (.VXN) dropped .72 to 13.74 and implied volatility in the Russell 2000 Small Cap Index, as measured by .RVX, dropped 1.24 to 16.00. Overall, while vols are lower, trading is very active after slow action Monday and Tuesday. 1 million calls and 800,000 puts traded SPX, VIX, NDX and other cash indexes so far.
Analyzing the ETF Market
US Oil Fund (USO) has battled back from morning losses and is up 16 cents to $33.80 following a modest uptick in crude oil prices Wednesday. USO is an exchange-traded fund designed to track the performance of crude through futures contracts. In options action, one investor is apparently accumulating a position in January 34 straddles on the oil fund (buying January 34 puts and January 34 calls). The straddle recently traded for $5.40, 5000X, and a source on the floor confirms the position was being bought. More than 25,000 now traded on the day and the straddle appears to be opening activity, possibly on the view oil prices and USO will see increasing volatility in the months ahead.
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