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Henry Schwartz Analysis: 5 Names Seeing Bullish Flow

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Well it seems Monday's pullback (179 points in the DJIA, 23 SPU points) didn't scare anyone off, and three days later most share values are higher on the week. The CBOE Volatility Index (VIX) is holding a bit, still nearly a point above Friday's close so I'd say the index world is still a bit cautious, but the old adage 'don't fight the tape' seems to be in force at the moment, with several names seeing bullish flow this week that might warrant a long view, outright or in an outperformance type of strategy.

Boyd Gaming (BYD) saw call buyers at the Feb 13 strike on Wednesday as shares traded near 11.11 in the middle of the stocks 52-week $6.35 to $14.46 range. More than 11,000 were opened, priced near $0.45, with this morning's total call OI of 126,000 contracts (vs 55,000 puts) at the highest level seen in several years. While shares have stalled out a bit- IV increasing and skew flattening suggests upside potential there.



16,000 calls traded in Banco Santandar (SAN) on Wednesday- triple the normal level, while 3,100 puts traded. 8,200 contracts were opened, including new long positions in March 10, Jan15 10 and Jan15 7 strikes. Shares closed at $9.40, a new two-year high for the Spanish bank.

Applied Materials (AMAT) saw very heavy bullish trading for a third time this week. Jan15 20 calls were bought Monday Mar 17 calls Tuesday, 85,000 calls traded Wednesday (vs 5,500 puts!). Stock has been on a run and is up well over 50% from a year ago. Earnings are due out on Feb 12.



Chinese vehicle maker Kandi Technologies (KNDI) can be a volatile name, but its near the high end of the 52-week range of $3.47 to $15 and call buyers yesterday where scooping up 15 strike calls in Jan and Feb, nearly 5,000 each. Some of this flow was closing (ouch) shorts but total call OI increased by 5,288 contracts.

AOL (AOL) call buyers were out in force yesterday as headlines circulated suggesting Yahoo! (YHOO) could make a bid for the company based on market-cap. 2,600 April 55 calls were bought to open, with total premium near $330,000 for the 12% upside position. Consistent with a speculative name, put-call skew is kinked to the upside, with call implied vol nearly three points above put for 25 delta February options.

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At the time of publication, Henry Schwartz held no positions in the stocks or issues mentioned.


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