Real-time equity news
U.S. stock market report 1730 ET 01July2010-Analyst suggests selling Goodyear Tire downside volatility ------------------------------------------------------------------------------
Goodyear Tire and Rubber Co was a notable performer for the week with its three-month at-the-money implied volatility up 11.1 percent as of Thursday's close, said Byron Douglass, senior research analyst at Credit Derivatives Research. Douglass looks at equity implied volatility from a credit perspective by considering both market and fundamental factors. He said even though spread trades are above 700 basis points, relative to historical CDS and equity relationship, Goodyear's implied volatility looks rich and the stock looks cheap, creating an opportunity to sell volatility. 'Goodyear's inverted term structure and steep put skew indicates that extreme risk aversion is baked into its volatility surface,' he said. Though a high risk trade, Douglass recommends selling January 2011 $7.50 GT puts at implied volatility around 65 percent to take advantage of the fear-based pricing. Shares of the largest U.S. tire maker rose 18 cents to $10.12.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1714 ET 1July2010-GE volume pops up after option play -----------------------------------------------------------------------------
General Electric Co's overall option volume was 2.1 times greater than average with about 238,000 contracts traded, according to Trade Alert. The turnover is almost evenly split down both sides of the options chain with about 118,000 puts and 121,000 calls on the tape. The action includes noteworthy activity in the January 2012 contracts after an investor sold a $10-$17.50 bearish risk-reversal at 8 cents (adjusted), 40,000 times, said WhatsTrading.com option strategist Frederic Ruffy. He noted the transaction was tied to stock, probably a block of 495,000 shares that traded within minutes of the risk-reversal. With GE down 30 cents to $14.12, this strategist might be closing an existing position, Ruffy said. Open interest exceeds 40,000 in both contracts. 'If so, it exits a position accumulated over time because there have been no similar volume spikes in the two contracts prior to today,' he said. Friday's open interest data should shed further light on the trade.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1649 ET 1July2010-Bar lowered for Friday's payrolls number? -----------------------------------------------------------------------------
Following a weak private sector ADP jobs report investors may have lowered their expectations for the closely watched non-farm payrolls number on Friday morning.
'I think the expectations bar has been lowered enough that if the private sector component is above 25,000-50,000 (expectations are 110,000) then the market can shrug it off,' Peter Boockvar, equity strategist at Miller Tabak & Co in New York, wrote in an email.
The private sector added just 13,000 private sector jobs in June, the ADP Employer Services report showed on Wednesday, compared to estimates of 60,000.
A steep drop in pending home sales, stubbornly high claims for jobless insurance, and reports that pointed to slowing global manufacturing growth heightened investor concerns about the economy on Thursday.
Investors will be paying close attention to private sector hiring as the headline will be muddied by part-time census workers. 'Any loss of jobs reported in the private sector and the S&P's head to 1,000,' added Boockvar.
The S&P 500 fell 0.3 percent to close at 1,027.37 on Thursday as it continues to grind lower. The benchmark index has fallen 8 percent in around two weeks.
Reuters Messaging: edward.krudy@reuters.com@reuters.net
1620 ET 1July2010-Wall Street ends down, fears rising as data looms -----------------------------------------------------------------------------
U.S. stocks ended lower on Thursday, starting the third quarter on heightened fears of a double-dip recession ahead of jobs data due on Friday.
The Standard & Poor's 500 Index finished the day down 3.34 points, or 0.32 percent, to 1,027.37 despite Ford Motor Co reporting that its sales had risen, sending shares up 4.9 percent.
The tech-heavy Nasdaq Composite Index ended down 7.88 points, or 0.37 percent, to 2,101.36. The Dow Jones industrial average ended the day down 41.49, or 0.42 percent, to 9732.53.
For details, see
Reuters Messaging: matt.lynley.reuters.com@reuters.net
1616 ET 1July2010-Microsoft gets bullish option trade -----------------------------------------------------------------------------
A large bullish option block was executed in Microsoft Corp this afternoon with an investor opening a position in the August $24 call options, said Patrick Mortimer, director of option trading at Pipeline Trading Systems. More than 15,000 contracts were purchased with the largest print being a block of 12,000 contracts at a premium of 93 cents. Total volume in these 43 delta calls has surpassed more than 22,000 contracts during the session. In all, about 141,000 calls and 69,000 puts traded in MSFT, according to Trade Alert. Its most active contracts were the August $24 and $19 call strikes, Trade Alert data show. The option implied volatility on the stock is 37 percent, up 1.5 percent from the previous session, Mortimer said. Shares of the world's largest software maker rose 15 cents to $23.16. The company is due to release its fourth-quarter earnings on July 22.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1441 ET 1July2010-Option players build up bullish positions in Homebuilder ETF -----------------------------------------------------------------------------
A number of investors may hoping for a rebound in the housing sector as they favor out-of-the-money call options in the SPDR S&P Home Builders Trust . The exchange-traded fund fell 17 cents to $14.13 after data showed pending sales of previously owned U.S. homes plunged 30 percent in May to a record low of 77.6. 'The order flow is interesting,' said WhatsTrading.com option strategist Frederic Ruffy.
The analyst noted that a block of 18,800 XHB January $17.50 calls traded at the 60-cent ask price. The strike has volume of 21,564 contracts traded and, while open interest is 30,600 lots, some of it is from Monday when 15,700 lots changed hands, including a block of 13,100 at the 81-cent ask price. 'So, it looks like one or more investors might be accumulating a bullish position in the homebuilder fund,' he said. Overall volume in XHB was 2.1 times greater than average with about 26,000 calls and 4,057 puts traded, according to Trade Alert.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1349 ET 1July2010-Options risk gauge out of synch with market declines -----------------------------------------------------------------------------
Wall Street's favorite barometer of investor anxiety, the so-called VIX , fell 3.59 percent to 33.30 during the afternoon session -- an unusual move, given that the index generally moves inversely with the S&P benchmark. The CBOE Volatility Index is a 30-day risk forecast of stock market volatility priced off of S&P 500 index options. It moved out of synch on Thursday with stock market losses as the underlying S&P 500 index slipped to 1,025.13.
Yet overall options action has a defensive bias with about 7.63 million puts traded so far compared to 6.14 million calls as puts outnumber calls by 1.24-to-1 ratio, according to Trade Alert. In the S&P 500, about 454,000 puts and 283,000 calls crossed the tape. 'The decline in the volatility might reflect expectations for quiet trading around the Fourth of July holiday,' said WhatsTrading.com option strategist Frederic Ruffy. 'Yet, with monthly payroll data looming (Friday), that might be a bold assumption.'
Financial markets are closed on Monday due to the observance of the July 4 independence holiday.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
Keywords: MARKETS STOCKSNEWS
COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
U.S. stock market report 1730 ET 01July2010-Analyst suggests selling Goodyear Tire downside volatility ------------------------------------------------------------------------------
Goodyear Tire and Rubber Co was a notable performer for the week with its three-month at-the-money implied volatility up 11.1 percent as of Thursday's close, said Byron Douglass, senior research analyst at Credit Derivatives Research. Douglass looks at equity implied volatility from a credit perspective by considering both market and fundamental factors. He said even though spread trades are above 700 basis points, relative to historical CDS and equity relationship, Goodyear's implied volatility looks rich and the stock looks cheap, creating an opportunity to sell volatility. 'Goodyear's inverted term structure and steep put skew indicates that extreme risk aversion is baked into its volatility surface,' he said. Though a high risk trade, Douglass recommends selling January 2011 $7.50 GT puts at implied volatility around 65 percent to take advantage of the fear-based pricing. Shares of the largest U.S. tire maker rose 18 cents to $10.12.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1714 ET 1July2010-GE volume pops up after option play -----------------------------------------------------------------------------
General Electric Co's overall option volume was 2.1 times greater than average with about 238,000 contracts traded, according to Trade Alert. The turnover is almost evenly split down both sides of the options chain with about 118,000 puts and 121,000 calls on the tape. The action includes noteworthy activity in the January 2012 contracts after an investor sold a $10-$17.50 bearish risk-reversal at 8 cents (adjusted), 40,000 times, said WhatsTrading.com option strategist Frederic Ruffy. He noted the transaction was tied to stock, probably a block of 495,000 shares that traded within minutes of the risk-reversal. With GE down 30 cents to $14.12, this strategist might be closing an existing position, Ruffy said. Open interest exceeds 40,000 in both contracts. 'If so, it exits a position accumulated over time because there have been no similar volume spikes in the two contracts prior to today,' he said. Friday's open interest data should shed further light on the trade.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1649 ET 1July2010-Bar lowered for Friday's payrolls number? -----------------------------------------------------------------------------
Following a weak private sector ADP jobs report investors may have lowered their expectations for the closely watched non-farm payrolls number on Friday morning.
'I think the expectations bar has been lowered enough that if the private sector component is above 25,000-50,000 (expectations are 110,000) then the market can shrug it off,' Peter Boockvar, equity strategist at Miller Tabak & Co in New York, wrote in an email.
The private sector added just 13,000 private sector jobs in June, the ADP Employer Services report showed on Wednesday, compared to estimates of 60,000.
A steep drop in pending home sales, stubbornly high claims for jobless insurance, and reports that pointed to slowing global manufacturing growth heightened investor concerns about the economy on Thursday.
Investors will be paying close attention to private sector hiring as the headline will be muddied by part-time census workers. 'Any loss of jobs reported in the private sector and the S&P's head to 1,000,' added Boockvar.
The S&P 500 fell 0.3 percent to close at 1,027.37 on Thursday as it continues to grind lower. The benchmark index has fallen 8 percent in around two weeks.
Reuters Messaging: edward.krudy@reuters.com@reuters.net
1620 ET 1July2010-Wall Street ends down, fears rising as data looms -----------------------------------------------------------------------------
U.S. stocks ended lower on Thursday, starting the third quarter on heightened fears of a double-dip recession ahead of jobs data due on Friday.
The Standard & Poor's 500 Index finished the day down 3.34 points, or 0.32 percent, to 1,027.37 despite Ford Motor Co reporting that its sales had risen, sending shares up 4.9 percent.
The tech-heavy Nasdaq Composite Index ended down 7.88 points, or 0.37 percent, to 2,101.36. The Dow Jones industrial average ended the day down 41.49, or 0.42 percent, to 9732.53.
For details, see
Reuters Messaging: matt.lynley.reuters.com@reuters.net
1616 ET 1July2010-Microsoft gets bullish option trade -----------------------------------------------------------------------------
A large bullish option block was executed in Microsoft Corp this afternoon with an investor opening a position in the August $24 call options, said Patrick Mortimer, director of option trading at Pipeline Trading Systems. More than 15,000 contracts were purchased with the largest print being a block of 12,000 contracts at a premium of 93 cents. Total volume in these 43 delta calls has surpassed more than 22,000 contracts during the session. In all, about 141,000 calls and 69,000 puts traded in MSFT, according to Trade Alert. Its most active contracts were the August $24 and $19 call strikes, Trade Alert data show. The option implied volatility on the stock is 37 percent, up 1.5 percent from the previous session, Mortimer said. Shares of the world's largest software maker rose 15 cents to $23.16. The company is due to release its fourth-quarter earnings on July 22.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1441 ET 1July2010-Option players build up bullish positions in Homebuilder ETF -----------------------------------------------------------------------------
A number of investors may hoping for a rebound in the housing sector as they favor out-of-the-money call options in the SPDR S&P Home Builders Trust . The exchange-traded fund fell 17 cents to $14.13 after data showed pending sales of previously owned U.S. homes plunged 30 percent in May to a record low of 77.6. 'The order flow is interesting,' said WhatsTrading.com option strategist Frederic Ruffy.
The analyst noted that a block of 18,800 XHB January $17.50 calls traded at the 60-cent ask price. The strike has volume of 21,564 contracts traded and, while open interest is 30,600 lots, some of it is from Monday when 15,700 lots changed hands, including a block of 13,100 at the 81-cent ask price. 'So, it looks like one or more investors might be accumulating a bullish position in the homebuilder fund,' he said. Overall volume in XHB was 2.1 times greater than average with about 26,000 calls and 4,057 puts traded, according to Trade Alert.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1349 ET 1July2010-Options risk gauge out of synch with market declines -----------------------------------------------------------------------------
Wall Street's favorite barometer of investor anxiety, the so-called VIX , fell 3.59 percent to 33.30 during the afternoon session -- an unusual move, given that the index generally moves inversely with the S&P benchmark. The CBOE Volatility Index is a 30-day risk forecast of stock market volatility priced off of S&P 500 index options. It moved out of synch on Thursday with stock market losses as the underlying S&P 500 index slipped to 1,025.13.
Yet overall options action has a defensive bias with about 7.63 million puts traded so far compared to 6.14 million calls as puts outnumber calls by 1.24-to-1 ratio, according to Trade Alert. In the S&P 500, about 454,000 puts and 283,000 calls crossed the tape. 'The decline in the volatility might reflect expectations for quiet trading around the Fourth of July holiday,' said WhatsTrading.com option strategist Frederic Ruffy. 'Yet, with monthly payroll data looming (Friday), that might be a bold assumption.'
Financial markets are closed on Monday due to the observance of the July 4 independence holiday.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
Keywords: MARKETS STOCKSNEWS
COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.