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Windstream Corp. Implieds Spike Following FCC Announcement
Author
Joseph Hargett (jhargett@sir-inc.com)

3/16/2010 3:22:48 PM

Telecommunications specialist Windstream Corp. (WIN) has seen its implied volatility spike sharply higher in recent weeks. The stock's Schaeffer's Volatility Index (SVI) tagged a six-month low of 23% on March 1, but this reading has since spiked 309% to its current perch at 67%. For a point of comparison, WIN's one-month historical volatility currently arrives at 21.71%.

What's more, WIN's SVI could head even higher due to the company's acquisition of Iowa Telecommunications Services Inc. (IWA). Additionally, the U.S. Federal Communications Commission (FCC) recently released its National Broadband Plan, which is designed to help spread broadband access during the next 10 years. According to analysts, this plan could mean lower revenue for WIN.

Checking in with data from the Chicago Board Options Exchange (CBOE) and International Securities Exchange (ISE), we find that activity among options traders is leaning toward the bearish end of the spectrum. Specifically, the equity's 10-day ISE/CBOE put/call volume ratio of 0.46 ranks above 75% of all those taken in the past year.

 
Calls Mount on UnitedHealth Group Inc.
Author
Sarah Wasserman (swasserman@sir-inc.com)

3/16/2010 3:22:14 PM

UnitedHealth Group Inc. (UNH) has seen a surge in option activity today, with volume of 80,000 contracts crossing the tape. Speculators have shown a preference for calls today, with 51,000 of these bullish bets changing hands.

Most popular by far has been the April 34 call, with 44,574 contracts traded -- 92% at the ask price, revealing that the majority of today's calls likely have been bought. Upon closer inspection, it appears that the bulk of this volume can be attributed to one trader.

Around noon, four blocks totaling 36,200 April 34 calls changed hands at the ask price, suggesting they were bought. With open interest at this strike currently set at 4,333, it appears these calls were bought to open. By buying the April 34 call, this option player is betting on UNH to surpass the $34 level by April expiration, rendering his call option in the money.

Today's preference for calls is nothing new; in the past two weeks, the International Securities Exchange (ISE) reports a call/put volume of 5.02, which ranks in the 89th percentile. In other words, speculators on this exchange have rarely shown a greater appetite for calls on UNH during the past year.

Elsewhere on the Street, short interest dropped by 14% during the last reporting period, and now accounts for just 1.26% of the equity's total available float.

 
KongZhong Corporation (KONG) At-the-Money Activity Spikes Ahead of Earnings
Author
Andrea Kramer (akramer@sir-inc.com)

3/16/2010 1:43:43 PM

KongZhong Corporation (KONG) is slated to confess its fourth-quarter figures after the closing bell today, according to Thomson Reuters. Ahead of the event, option traders are taking the opportunity to place both short- and longer-term bets on the Chinese technology concern – especially on the put side of the tape.

So far today, KONG has seen about 1,000 calls change hands – roughly six times its expected daily volume. On the flip side of the coin, the equity has seen close to 1,500 puts exchanged – more than 45 times its predicted single-session volume of only 32 contracts.

On the call side, the at-the-money March 7.50 strike has seen 809 contracts traded on open interest of 801 contracts, pointing to new last-minute positions ahead of options expiration on Friday. However, most of the calls have traded between the bid and ask prices, making it difficult to determine whether they were bought or sold.

Meanwhile, the stock's June 7.50 put has seen 1,430 contracts exchanged on open interest of fewer than 450 contracts – again, pointing to new positions. Most of the long-term puts have crossed closer to the ask price, implying that a healthy portion of bears are betting on the shares of KONG to fizzle over the next few months.

At last check, KONG has added 0.9% to explore the $7.50 area. From a longer-term perspective, the equity has surrendered 40% since the start of 2010, and is poised to close the month beneath its 20-month moving average for the first time since January 2009.

 
Tidal Wave of Puts Hits Carnival Corporation
Author
Sarah Wasserman (swasserman@sir-inc.com)

3/16/2010 1:41:00 PM

Put players have stormed Carnival Corporation (CCL) today, with the equity seeing 22 times its expected daily put volume. It seems this surge in put activity has been motivated by both the bears and the bulls.

Most popular by far has been the April 37 put, with volume of 10,944 contracts traded on open interest of 2,183 -- pointing to the addition of fresh positions. With 50% of these puts trading at the bid price, it appears a healthy portion of these puts were sold to open. By writing the April 37 put, the speculator is counting on CCL to remain above the $37 level heading into April expiration, rendering the sold put worthless.

Meanwhile, the April 35 put has also seen a wave of activity today, with volume of 7,954 contracts traded -- 68% at the ask price, implying they were purchased. With open interest at this strike currently perched at 525, it appears there has been a healthy amount of buy-to-open activity at this strike today. By buying the April 35 put, the option player is betting on CCL to fall beneath the 35-strike by April expiration.

CCL's Schaeffer's put/call open interest ratio (SOIR) is currently set at 1.64, in the 80th annual percentile. In other words, short-term option traders have been more bearish toward CCL only 20% of the time during the past year.

CCL has gained 17% in 2010, and is currently exploring the $37.05 area.

 
Option Players Buzzing at Green Mountain Coffee Roasters Inc.
Author
Sarah Wasserman (swasserman@sir-inc.com)

3/16/2010 12:36:15 PM

Option activity percolated on Green Mountain Coffee Roasters Inc. (GMCR) Monday, with call volume surging to 7,397 -- double the coffee concern's expected average.

The April 90 call saw the highest volume, with 1,851 contracts crossing the tape on open interest of 1,451. Open interest at the April 90 call rose overnight by 550 contracts, confirming that new positions were opened here yesterday.

Looking at specific trades, it appears one trader is responsible for a fair portion of the activity at this strike. Late yesterday afternoon, a block of 500 April 90 calls changed hands at the bid price of $5.30, suggesting they were sold. With GMCR currently trading above the $93 level, it seems likely that this trader sold to close the April 90 call, collecting the profit from his in-the-money position.

However, if these calls were sold to open, then this trader would be anticipating GMCR to backpedal past the 90-strike by April expiration, rendering the written calls worthless and allowing this player to keep the premium he collected at initiation.

GMCR has added over 14% in 2010, and is currently exploring the $93.85 area.

 
Commentary by WhatsTrading.com
 
Unusual Activity Roundup, Mar 16
3/16/2010 4:20:03 PM

Some less actively traded names seeing bullish order flow: Steelcase (SLT), Crown Castle (CCI), Jones Apparel (JNY) Bearish order flow: Werner Enterprises (WERN), Tibco Software (TIBX), Momenta Pharm (MNTA) Post Earnings: Sequenom (SQNM), Ariad Pharm (ARIA), AthenaHealth (ATHN) Pre-Earnings: Discover Financial (DFS), Khongzong (KONG) Ex-div.: HSBC (HBC), Chubb (CB)

Read more at WhatsTrading.com

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General Electric Company (GE) $17.99 +4.05%
3/16/2010 3:20:04 PM

GE, which saw more than 68,500 Mar 17.5 calls traded yesterday, is up 63 cents to $17.92 today and heading to session highs after the Fed stood pat on rates and said it expects rates to stay low for quite some time. GE shares were already higher ahead of the announcement after the company said it expects to make profits and increase its dividend in 2011.\n
\nIn the options market, trading remains brisk with another 281000 calls and 119000 puts on the tape so far. March 17.5 calls are agiain the most actives, with another 66.2K traded and some closing trades likely driving the action, as open interest is 174K and still the largest of any GE options contact. Some investors are likely rolling to the April 18, April 19, and June 18 calls on hopes the stock can continue its running to new 52-week highs.\n
\nClick here for yesterday's comment on GE, which included signs of call buyers in morning action. We monitor the options order flow throughout the day and post free updates at WhatsTrading.com. Please see our info on Premium (to your right) if you'd like continuous updates like this throughout the trading day, as well as other tools to find options trading ideas, information, and education.

Read more at WhatsTrading.com

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Starbucks Corp (SBUX) $25.21 +3.24%
3/16/2010 2:20:06 PM

Starbuck's (SBUX), gapped up, touched a new 52-week high, and was recently 81 cents higher to $25.23 after UBS upgraded the stock to Buy. Options action picked up as well, with 12,000 calls and 7,000 puts traded so far. March 25 and 26 calls, which have three days of life remaining after today, are the most actives. April 25 adn 26 calls are seeing interest as well. Implied volatility has eased about 1 percent and, at 25, is probing 52-week lows.

Read more at WhatsTrading.com

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E Trade Financial Corporation (ETFC) $1.66 +0.00%
3/16/2010 12:20:03 PM

Etrade Financial (ETFC) is flat at $1.66 and the July 1.5 - 2 strangle trades at 18 cents, 15000X on ISE. Looks like both legs sold and possibly a play on the stock staying within the two strikes (or breakevens of $1.32 and $2.18) through the July expiration.

Read more at WhatsTrading.com

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AMR Corp (AMR) $9.87 +0.30%
3/16/2010 10:20:02 AM

AMR lost 11 cents to $9.85 and in late-day action yesterday the bullish Aug 8 - 12 risk reversal trades at even, 4400X. Open interest data indicate that a new position was opened. Looks like a play on further gains for AMR over the next few months. Shares are 42.3 percent since early Feb amid renewed investor interest in the airline sector.

Read more at WhatsTrading.com

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Daily Rundown, March 16
3/16/2010 9:00:03 AM

Stocks are indicated higher on better-than-expected housing data and ahead of a Federal Reserve rate announcement. Forty-five minutes before the opening bell on Wall Street, stock index futures indicate that the Dow Jones Industrial Average might add 15 or 20 points at the open.\n
\nStock index futures ticked higher after the latest data showed housing starts at an annual rate of 575,000 homes in February; which was down from 611,000 in January, but better than the 570,000 that economists had expected. Building permits, a better a gauge of future activity, fell to 612,000 from 622,000, but ahead of the 601,000 that had been expected.\n
\nAttention turns to the Federal Reserve Open Market Committee [FOMC] meeting this afternoon. The FOMC releases its post-meeting statement at 14:15 eastern time. While no changes in rates are expected, the post meeting text will be scrutinized for indications of possible policy shifts.\n
\nBonds are holding modest losses in cautious trading ahead of the Fed. The benchmark ten-year Treasury is down 2/32nd and now yields 3.70 percent.\n
\nThe dollar edged up .14 to 90.60 against the Japanese yen. The euro added .0042 to 1.3715 against the buck. \n
\nMeanwhile, crude oil gained 50 cents to $80.30 a barrel and gold added $10.10 to $1115.50 an ounce.\n
\nAmong the stocks to watch, Sequenom (SQNM) shares are down 20 percent after the biotech reported a 30-cent per share quarterly loss, which was a nickel worse than analyst estimates. Boston Scientific (BSX), which took a hit yesterday after halting production of its defibrillator, is down again after Goldman Sachs downgraded the stock. Limited Brands (LTD) announced a special dividend of $1 per share and shares rose 4 percent. Starbucks (SBUX) rose 2.4 percent after UBS upgraded the stock to Buy. Finally, General Mills (GIS) might see some action ahead of earnings, due out tomorrow before the bell. \n

Read more at WhatsTrading.com

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Unusual Activity Roundup, Mar 15
3/15/2010 4:00:05 PM

Some less actively traded names seeing bullish order flow: Finisar (FNSR), Polycom (PLCM), Medicis Pharmaceuticals (MRX) Bearish order flow: Praxair (PX), Wabco Holdings (WBC), Pinnacle Entertainment (PNK) Post Earnings: American Oriental (AOB), GTX Inc (GTXI) Pre-Earnings: AthenaHealth (ATHN), Factset (FDS) Ex-div.: Apollo Investment (AINV)

Read more at WhatsTrading.com

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Baidu Inc (BIDU) $571.81 +3.92%
3/15/2010 3:00:04 PM

Baidu.com (BIDU) shares have been volatile today, hitting a high of $628.50 on uncertainty about Google's (GOOG) plans for China. Flyonthewall says we're likely to see increasing interest in a GOOG - BIDU pairs trade, where investors sell Google and buy Baidu on the idea that what's bad for Google Internet search is good for its biggest competitor in China. BIDU rallied to fresh all-time highs in morning action, but has since come off its best levels. With shares now up $20.76 to $571 options volume is 3X the average daily, with 45K calls and 41K puts traded. The top trade is a bearish Mar 580 - 590 put spread at $5 on ISE. Beyond that, the next biggest trade is a lot of 258 Jun 600 calls on the bid $33.30. Meanwihle, BIDU implied volatility is up about 10 percent to 38.

Read more at WhatsTrading.com

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General Electric Company (GE) $17.08 +0.23%
3/15/2010 1:20:02 PM

GE is flat at $17.04 and March 17.5 calls are busy Monday. More than 43K traded and some of the action might be closing. Open interest is 181.4K and the biggest OI position of any GE contract. However, the top trade is a block of 2738 contracts at 17 cents on the ISE, which traded just after the opening bell and appears to be an opening customer buyer, according to ISEE data. The interest in GE calls comes on news the company is selling its electrostatic precipitator and emissions monitoring businesses to McDermott and the day before it presents at a Goldman Sachs Industrial Unscripted Conference. GE is also presenting at a Jefferies Global Clean Tech Conference tomorrow and Wednesday.

Read more at WhatsTrading.com

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Walmart Stores Inc (WMT) $55.03 +2.10%
3/15/2010 11:20:05 AM

Walmart (WMT) is up $1.05 to $54.95 and Mar 55 calls are among the most actives early Monday after Citigroup upgraded the stock to Buy. 13.1K traded (20% Bid / 27% Mid / 53% Ask). Another 8500 April 55 calls also changed hands. Implied volatility in WMT is steady around 14.25 as the stock runs towards 2009 and early 2010 resistance highs between $52.00 and $52.20.

Read more at WhatsTrading.com

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More Options Commentaries and Observations by Schaeffer’s

 
Market Recap: S&P 500 Finds Fresh Annual High as Fed Stands Pat

The Federal Open Market Committee (FOMC) took the spotlight today, and the central bankers shocked absolutely no one by voting to maintain interest rates at their current, rock-bottom levels. The FOMC also reiterated its stance that economic conditions are "likely to warrant exceptionally low levels of the federal funds rate for an extended period," although Kansas City Fed President Thomas Hoenig once again voiced his dissent with this particular bit of language. The initial reaction to the Fed announcement was modestly positive, with stocks clinging to small gains, but the bulls' momentum was dampened by the day's downbeat housing data. The Commerce Department broke the bad news that housing starts dropped by nearly 6% in February, as severe winter weather put a freeze on home building. While stocks maintained a tenuous grip on positive territory through most of the session, a last-minute buying push left the major market indexes hovering near their intraday highs.

read more...

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Options 101: A Hypothetical Covered Call on Jabil Circuit, Inc. (JBL)

The Federal Open Market Committee (FOMC) took the spotlight today, and the central bankers shocked absolutely no one by voting to maintain interest rates at their current, rock-bottom levels. The FOMC also reiterated its stance that economic conditions are "likely to warrant exceptionally low levels of the federal funds rate for an extended period," although Kansas City Fed President Thomas Hoenig once again voiced his dissent with this particular bit of language. The initial reaction to the Fed announcement was modestly positive, with stocks clinging to small gains, but the bulls' momentum was dampened by the day's downbeat housing data. The Commerce Department broke the bad news that housing starts dropped by nearly 6% in February, as severe winter weather put a freeze on home building. While stocks maintained a tenuous grip on positive territory through most of the session, a last-minute buying push left the major market indexes hovering near their intraday highs.

read more...

Close Article

 
Options Coach: Rolling With the Punches

The Federal Open Market Committee (FOMC) took the spotlight today, and the central bankers shocked absolutely no one by voting to maintain interest rates at their current, rock-bottom levels. The FOMC also reiterated its stance that economic conditions are "likely to warrant exceptionally low levels of the federal funds rate for an extended period," although Kansas City Fed President Thomas Hoenig once again voiced his dissent with this particular bit of language. The initial reaction to the Fed announcement was modestly positive, with stocks clinging to small gains, but the bulls' momentum was dampened by the day's downbeat housing data. The Commerce Department broke the bad news that housing starts dropped by nearly 6% in February, as severe winter weather put a freeze on home building. While stocks maintained a tenuous grip on positive territory through most of the session, a last-minute buying push left the major market indexes hovering near their intraday highs.

read more...

Close Article

 
Options Strategy of the Day: The Long Box Spread

The Federal Open Market Committee (FOMC) took the spotlight today, and the central bankers shocked absolutely no one by voting to maintain interest rates at their current, rock-bottom levels. The FOMC also reiterated its stance that economic conditions are "likely to warrant exceptionally low levels of the federal funds rate for an extended period," although Kansas City Fed President Thomas Hoenig once again voiced his dissent with this particular bit of language. The initial reaction to the Fed announcement was modestly positive, with stocks clinging to small gains, but the bulls' momentum was dampened by the day's downbeat housing data. The Commerce Department broke the bad news that housing starts dropped by nearly 6% in February, as severe winter weather put a freeze on home building. While stocks maintained a tenuous grip on positive territory through most of the session, a last-minute buying push left the major market indexes hovering near their intraday highs.

read more...

Close Article

 
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