After a brief (one day!) dip on concerns about events in the Ukraine, US markets quickly resumed their bull run, with just a few names setting new 52-week highs during yesterday's trading, including active option names Facebook (FB), Pfizer (PFE), Zynga (ZNGA), Disney (DIS), Las Vegas Sands (LVS) and MGM (MGM). The CBOE Volatility Index (VIX) is back below 14, not quite as low as the mid-January 12 handle, but really not far above that either which indicates little concern about an abrupt correction and a 'back to business' mentality where earnings and fundamentals drive much of the action.
Put/Call for single stocks has dropped considerably over the past two trading days as the focus returned to the upside, with a reading of 0.45, or 9 calls for every 4 puts. This is one of more extreme levels of the past six months and is well below the .6 recent average where 5 calls trade for every 3 puts.
While I have some concern that the market may be heading back to frothy levels, bullish flow is bullish flow and 'the trend is your friend' is the axiom that holds. The following names stood out yesterday as call buyers opened new positions struck above spot.
Stillwater Mining (SWC) saw notable call buying as 10000 Apr 15 calls traded for $0.35 per contract on the all-electronic ISE. A customer was buying-to-open according to ISEE data. Mar 14, Mar 15, and Apr 14 calls on the stock are actively traded as well. The company reported earnings earlier this week and the stock is holding near 52-week highs.
Dryships (DRYS) lifted nearly 7% to $4.14 in brisk trading and total options volume is running 2.5X the daily average. Roughly 23,000 calls and 5,800 puts so far. The top trade is a 4300-lot of Apr 4 calls for $0.36 on the International Securities Exchange. An investor bought the calls, to open, according to ISEE data. 9,540 have now traded on the day. Mar 4, Apr 3.5, and Weekly 4 calls are the next most actives. Bullish trading in DRYS might be a sector play after data out this morning showed the Baltic Dry Index up 5%.
Fertilizer name Potash (POT) was active with nearly 40,000 calls trading, or 3x the recent average as shares lifted $1.31 to $34.79 and at-the-money volatility spiked nearly 2 points. Buyers of March 35 and 36 strike calls drove most of the flow.
Delta Air Lines (DAL) saw a second day of heavy call buying as shares set all-time highs on both days. Tuesday we saw a buyer scoopup $700,000 worth of calls in the form of 7,500 April 36 calls in the 90cent range. That trader is up 28% (nearly $200,000) on the trade. April 32 and 30 calls were active Wednesday as well. DAL shares have doubled in the past 9 months.
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