Stocks closed mixed, with the Dow snapping its four-day winning streak ahead of the December employment report on Friday. The stronger dollar played havoc with oil, gold and commodities and some weak same-store sales hurt retailers, while semiconductors and pharmaceuticals stepped up.
Expectations are running high for the December jobs report on Friday. The number of people filing for jobless claims for the first time rose by 18,000 to 409,000 during the week ended Jan. 1 from a revised 391,000 in the previous week, the Labor Department said early Thursday. Economists had expected claims to increase by 17,000, according to Briefing.com.
The Dow Jones Industrial Average ended down 25.58 points, or 0.22%, to close at 11,697. The S&P 500 down 2.71 points, or 0.21%, to close at 1273, and the NASDAQ was up 7.69 points, or 0.28%, to finish at 2709.
In a letter to U.S. Senate Majority leader Harry Reid, Treasury Secretary Timothy Geithner said that the the United States may hit the legal limit on its ability to borrow by March 31 and faces serious consequences unless Congress acts by then to raise it. As a result, CBOE Volatility Index ( VIX) March call volatility is elevated as spreaders manage risk into tomorrow's employment report, EPS season and U.S. legal debt limit concerns. VIX closed higher by 2.17%, at $17.39, on overall put contract volume of 109,000 compared to 205,000 call contracts, with February 27.5 and March 35 calls as the most active series.
SPDR S&P 500 ETF ( SPY) traders managed their positions by limiting new money into short premium positions and building long March positions. SPY ended down $0.25, at $127.29, on 1.02 million put contracts compared to 585,000 call contracts. January put option implied volatility is at 15, February at 18 and March at 19, below its 26-week average of 22.
The PowerShares QQQ Trust ( QQQQ) closed up $0.18, at $55.92. January volatility is at 18 and March at 21, compared to its six-month average of 22 according, suggesting larger March price movement. The Q's have near-term support at its ten-day moving average of $55.02.
Ford ( F) contracts traded 2.3x its normal daily volume as the underlying rallied to a nine-year high into the North American Auto Show on January 10. Overall option implied volatility of 34 is below its six-month average of 38. January 17.5 and 19 calls were the most actively traded series on total put volume of 82,000 contracts compared to 194,000 call contracts.
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