Stock Market Averages Relatively Unchanged Ahead of Holiday



Market Recap Mid-day Wednesday, November 21.

Stock market averages are little changed following a round of mixed economic data and amid light volumes ahead of the Thanksgiving holiday. According to the Labor Department, Jobless Claims declined by 41,000 to 410,000 last week, which was significantly better than the 423,000 that economists had expected. However, the U. of Michigan Consumer Sentiment Index fell to 82.7 for November, from 84.9 and below expectations of 84.5. The final economic stat of the week showed the List of Leading Indicators was up .2 percent for October and in-line with expectations. Crude oil is ticking 55 cents higher to $87.30 and gold added $2.5 to $1726. Hong Kong’s Hang Seng and China’s Shanghai both gained more than 1 percent overnight, but trading has been mostly quiet across other Asian and European equity markets. The euro now sits at 1.2815 on the dollar after EU officials approved further financial aid to Greece. Trading is quiet on Wall Street as well. The Dow Jones Industrial Average has added 25 points and the NASDAQ is flat. Overall options volume is slowing ahead of the Thanksgiving holiday, with about 2 million calls and 1.7 million puts traded across the exchanges mid-day. Markets are closed tomorrow and open only for an abbreviated session Friday. See you Monday!

This Morning’s Bullish Trading

Vivus Pharmaceuticals (VVUS) is up 10.4 percent to $11.43 Wednesday on reports health insurance giant Aetna is adding the company’s Qsymia to its coverage. VVUS is up on heavy volume of 11 million shares. Meanwhile, 20,000 calls and 3,165 puts traded on biotechnology company heading into midday action. December $13 calls are the most actives, with 3,535 on the tape so far. December 11, 12, and $14 calls are seeing interest as well. The stock had dropped more than 54 percent from 10/12 through yesterday. Short interest (as percent of float) ratio in the stock was nearly 18 percent as of 10/30. Short sellers might be driving some of the flow in the upside calls to hedge positions as VVUS bounces Wednesday.

Celsion (CLSN), a Lawrenceville, NJ biotechnology company, is trading up 27 cents to $6.36 and options volume on the stock is running 2X the daily average, possibly being driven by a substantial diagonal call spread. In this trade, the investor apparently bought 5,000 February 10 calls on the biotech for $1.15 and sold 5,000 January 7 calls at $1.15. The Jan 7 – Feb 10 call spread, for even money, is possibly a view that shares will hold below $7 through the January expiration, but then rally to more than $10 by mid-February. It might be a play on the Phase 3 Data for the company’s ThermoDox, due out on January 30, 2013.

This Morning’s Bearish Trading

Nokia (NOK) trades up 25 cents to $3.20 in very heavy trading of 43.5 million shares and is on a five-day 20 percent run higher. It’s not clear what is driving the action, but shares of the Finnish phone company are up 8 percent and options on NOK are busy as well. 59,000 puts and 38,000 calls traded on the ticker so far. Some investors are possibly buying puts to help hedge the recent gains in the stock. January 3 puts, which are now 20 cents out-of-the-money, are the most actives in Nokia. Volume is approaching 30,000 contracts. January 3.5 and January 2 puts are the next most actives.

Dreamworks Animation (DWA) is off 86 cents to $18.78 and options volume on the Glendale, CA moving production company is running 13X the daily average, with 4,600 puts and only 100 calls traded on the stock so far. The top trade is a 1000-lot of December 20 puts for $1.10 on the International Securities Exchange this morning. An investor bought the puts to open a new position, according to data form the ISE. 2,100 now traded total. December 17.5 puts are the most actives in DWA, with 2,475 changing hands. It’s not clear why the stock fell 4.4 percent or why puts are busy, but implied volatility in DWA options is moving up 20 percent to 37 on the day.

Volume Signals

NVidia (NVDA) options volume is running 2X the (22-day) average, with 40,000 contracts traded and put volume accounting for 94 percent of the volume. (CRM) options volume is 2X, the average daily, with 38,000 contracts traded and put volume representing 54 percent of the activity.

Deere (DE) options volume is running 3X the average daily, with 35,000 contracts traded and put volume accounting for 56 percent of the activity.

Increasing options activity is also being seen in Suntrust (STI), St. Jude Medical (STJ), and Celsion (CLSN).


Implied Volatility Mover

St. Jude Medical (STJ) drops $4.12 to $31.59 on heavy volume of 11 million shares and implied volatility in the options on the medical device-maker is moving higher after the New York Times ran a story noting that officials have been scrutinizing the company’s heart device business. The stock is down and options volume is 8X the daily average. About 10,000 calls and 10,000 puts traded in the name so far. Jan2014 35 calls and 25 puts are the most actives and 30-day implied volatility in STJ options jumped 40 percent to 33.

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Joe Cusick



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Joe Cusick

Joseph Cusick is currently Vice President of Wealth and Asset Management at MoneyBlock. Joseph is passionate about marrying his 20 years of market experience and the powerful tools at MoneyBlock with the goal of empowering wealth managers with the tools to better manage and grow their business. Joseph was previously the Senior…