Crude Cracks

Stock market averages moved higher through midday and are holding near session highs heading into the final half hour of trading Monday.  Strength across Asia’s equity markets, including a 2.5 percent rally in Japan, helped set the table for a steady open on Wall Street after a report showed China export growth of 7.2 percent in August, which was better than the 6 percent increase that was expected.  The domestic economic news will be light the first half of this week until Jobless Claims print Thursday. A report on Consumer Credit was out this afternoon and showed an increase of $10.4 billion for July, which was below expectations of $13 billion. The market showed little reaction to the data. In stock news, Hovnanian (HOV) is ticking 2.4 percent higher after the homebuilder reported a quarterly profit of 6 cents per share, which narrowly missed Street estimates of 7 cents. Crude oil prices are falling to session lows, down $1.39 to $109.14.  Gold is little changed at $1387.  On Wall Street, the Dow was up 80 points midday and is now up 144 points. With 30 minutes left to trade, the NASDAQ is up 44 points.

Today’s Bullish Trading

Huntsman (HUN) is up 70 cents, or 3.9 percent, to $18.70 in active trading of 3.6 million shares and options on the stock are busy today ahead of two conference presentations tomorrow. HUN will present at KeyBanc Capital Markets Basic Materials and Packaging Conference and a RBC Capital markets Global Industrials Conference. 19,660 calls and 1,135 puts traded on the stock so far today. October 20 calls are the most actives on the Salt Lake City, UT chemicals company. 6,278 traded. Sep 17, Sep 18 and Oct 19 calls on HUN are actively traded today as well.

Bullish trading was also seen in Cheniere Energy (LNG), Fusion IO (FIO), and Potash (POT).

Today’s Bearish Trading

Michael Kors Holdings (KORS) is flat at $75.70 after hitting new 52-week highs of $76.74 in morning trading. The stock has outperformed in recent months and is up 48.4% year-to-date. Some players in the options market are possibly anticipating a pullback in the short-term, as September 75 puts on KORS are drawing interest today. 4,186 contracts traded against 469 in open interest. The flow includes a 2,520-lot for $1.28 per contract when the market was $1.15 to $1.30. An investor is possibly buying the puts to open a new position and, if so, it’s a short-term options play. The contract is .9 percent out-of-the-money and expiring in 11 days.

Bearish trading was also seen in Lamar Advertising (LAMR), KCG Holdings (KCG), and Seadrill (SDRL).

Index Recap

CBOE Volatility Index (.VIX) is off .37 to 15.48 and moving off session lows of 15.22, even as the S&P 500 Index (SPX) adds 15.59 points to 1670.76. On the options front, trading in the VIX pit is running a bit lighter than usual, but the flow is lopsided.  314,740 calls and 105,050 puts so far. Some investors are possibly bracing for an uptick in market volatility in the days ahead, as the Sep 18, 20 and 23 calls are the most active VIX options today. These upside VIX calls expire next Wednesday and, after today, have just 6 trading days (8 calendar days) of life remaining.

Analyzing the ETF Market

SPDR Technology Fund (XLK) is up 38 cents, or 1.2 percent, to $32.15 in active trading of 4.3 million shares and September Weekly (expiring 9/27) 33-strike calls on the ETF are seeing interest today. The biggest trade is a 16,780-lot for 7 cents per contract when the market was 4 to 7 cents. 28,220 contracts now traded. There is no open interest at that strike. So, the flow appears to be a new position and, if so, the activity appears to be targeting a move higher for the tech sector through the rest of September. These Weekly 33 calls are 2.6 percent out-of-the-money and expiring in 18 days. XLK holds all of the technology names from the S&P and tech giant Apple Computer (AAPL) will be in focus during tomorrow’s highly anticipated iPhone event.