Wow, the silence is deafening. The major indices managed to avoid another 2% up or down move, and volume was fairly low. There was no major market-moving item hat was looped news cycle all day long.
The S&P 500 Index traded between 1341.21 and 1357.47, a mere 0.01% intraday day range. This the narrowest day in over seven weeks. Is it healthy consolidation or simply a sign of investors pulling and back from placing bets on the market after weeks of increased volatility?
Of course as on option trader, I'm hoping this is a momentary breather as volatility offers opportunity. So it's encouraging to see that the VIX only slipped 0.85% and remains above the 25% level which keeps the uptrend line alive.
Shares of Verisign
(VRSN)
, an internet security firm, traded 11 times the average daily volume as the stock declined some 2% to $35.40 a share. The focus of activity was in the June $35 straddle in which it appears someone sold the combination for a net credit of $6.00. They were taking advantage of the fact that implied volatility of Verisign's options has been rising. This is basically a bet that shares of Versign's shares won't move more than 18% in the next three months.
Yingli Green Energy
(YGE)
a company I mentioned a few weeks as the alternative energy company appeared to be forming a bottom.
Trading volume in Yingli's options rose back up today, as the stock rose some 9.5% to $17.50. The most active strike was the April $22.50 call which traded 1,440 contracts, surpassing the prior open interest of 918 contracts in the strike.
To view today's video take on Yingli click here. (One way to Play Solar)
Steven Smith writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He was a seatholding member of the Chicago Board of Trade (CBOT) and the Chicago Board Options Exchange (CBOE) from May 1989 to August 1995. During that six-year period, he traded multiple markets for his own personal account and acted as an executing broker for third-party accounts. He appreciates your feedback; click here to send him an email.To read more of Steve Smith's options ideas take a free trial to TheStreet.com Options Alerts.
