Options Noise Drowns Out Everything Else

I am sure many of you believe my focus on options pinning and options expiration and the havoc they cause is excessive. But let me give you an example of what I am talking about, what I see, and how darned confusing it all is.

We know health care is on the move, some of it because a belief that reform can be stillborn and some of it because we have clarity, and clarity -- even if things aren't so hot -- is darned good for the stocks. We see the banks run today, which would seem to be a function of lower interest rates, but then again there's been such immense options pressure downward on these stocks, pressure that seems to have stopped for the moment, that maybe that's what's moving the group.

Then we take the curious case of Verizon (VZ - commentary - Trade Now). Here's a stock that's been moribund, and you have to admit it's been dead in the water at $29 forever. Suddenly it is on the move. But there's also tremendous options pressure at the $30 level, so perhaps we are simply seeing that tug upward as a massive number of June 30 puts are being sold. That means buying pressure for the stock.

So, is that Verizon rally signaling a slowdown that's moving the utilities? Is it presaging a big interest-rate decline, something that is also influencing the positive trading in the banks today? Is it incorrectly predicting a slowdown given that there is so much enterprise activity and it's been weak? Is it just a total aberration, in which case we have to look at other stocks?

That's been my tactic as I have been watching General Mills (GIS - commentary - Trade Now) and Pepsi (PEP - commentary - Trade Now), two classic tells for a slowdown. But if there is such a slowdown, how can Carnival (CCL - commentary - Trade Now) and Nike (NKE - commentary - Trade Now), two totally discretionary plays, be on the move? (Nike's being helped by two firms saying the quarter will be made, certainly helpful!) And how about FedEx (FDX - commentary - Trade Now) going right back up, even more than it was down after the so-called guidance cut. Then again, Best Buy (BBY - commentary - Trade Now) is down, in a continuation of the alleged consumer-led slowdown. Now, throw in this monkey wrench: Best Buy's being brought down by a gigantic level of June 35 call selling, and FDX has had no options pressure at all.

Now, how about one last hobgoblin? We don't even have the best look yet at expiration. That comes later in the afternoon.

My take?

Right now there's too much noise. We can't hear a thing. Too early to make a decision other than health care reform is either on hold or clear and not that bad.

At the time of publication, Cramer was long Pepsi and General Mills.

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