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Afternoon Full Court Press


Thanks Dr. J!

  • Archipelago (AX) spiked as high as $29 from last night's close down at $18.76 as the market cheered their deal with the NYSE. I think it's fair to say that although some in the media are saying there are members of the NYSE that don't like this deal, as always, I will follow the money and make my decision accordingly. Given that I show a seat trading today for $1,800,000, up $180,000 from last Friday's $1,620,000, I'd say the preliminary indication is the NYSE members like the the Arca deal. By the way, the NYSE seat traded $975,000 back on January 11th, so the outlook is significantly better now than it was then!

  • Fairly heavy turnover in Ebay (EBAY) options today with 70,000 calls trading against 35,000 puts. That May 35 call, 30 put strangle is getting crushed! With EBAY down $.32 to $32.79 the May 35 calls are down $.50 to $.75, a drop of 40% and the May 30 puts are off $1 to $.50, a loss of 67%. Put 'em together and the premo sellers were the big winners on this earnings call, as they took $1.75 out of that strangle overnight.

  • IWM, the Russell 2000 ETF is up 1.8%, hitting $118.61 after closing at $116.45 last night and traders are slamdancing on the puts! As my friend John Succo observed, there are still some buyers of puts in the IWM, but traders seem more interested in selling to those seeking protection and hedging those sales by selling the IWM and buying calls, thus creating the synthetic put. I show over 73,000 of the IWM May 70 puts trading against about 29,000 calls. My dollar weighted numbers are likewise about 3:1 on the puts.

  • After trading down in the after-hours session last night Qualcomm (QCOM) has turned around 180 degrees and is trading up $.94 to $34.15 at mid-session. The May 32.50 puts are down 71% to $.40 and the almost at-the-money May 35 puts are down 54%, falling $1.55 to $1.30 as those that held these for protection ahead of the earnings are dumping them as the uncertainty passes.

  • Lastly, I just want to once more point out the incredible volatility in these crazy energy stocks! My favorite headache maker is still Valero (VLO) wich has had another $4 range at mid-session! Volatility is up from 35% last month to 44% right now and every day it seems to find a way to justify that volatility! For instance, the May 75 calls have traded as low as $2 and as high as $3.10 and the May 70 calls have traded between $4.10 and $5.90. Options swinging up and down 15 - 20% in as many minutes are enough to drive one towards adult beverages, especially when you get on the wrong side! Another 15,000 calls trade against 8,000 puts with the bulk trading in the near-term options.

  • 260,000 QQQQ opitons trade at mid-session, which is slightly more active than usual, but the fact that the calls are out trading the puts by nearly 2:1 is very unusual, as we usually see that ratio completely the other way around. What's that mean Doc? Could it be that the increase in call volume indicates institutions covering some of their shorts? Could be...
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position in vlo & qqqq.
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