Real-time equity news
U.S. stock market report
1730 ET 13April2011
Players eye call options on CBOE Volatility Index
The CBOE Volatility Index, or VIX, slipped 0.99 percent to 16.92 as U.S. stocks finished mostly flat. The VIX futures were also lower with both April and May futures down to 18.30 and 20.35, respectively. In VIX options, the May and June 20 calls are the busiest options as more than 100,000 contracts changed hands in each strike, according to Trade Alert.
The action includes a May-June 30 call spread and apparently bought at $1.20, which traded 45,000 times and at $1.15, which traded 28,000 times, said WhatsTrading.com options strategist Frederic Ruffy. Ruffy surmised the trade could be a possible roll of deep out-of-the-money calls from one month to the next and/or a bet that the VIX will remain tame through the May expiration, then possibly spike into mid-June.
Joe Cusick, senior market analyst at optionsXpress, also said an investor might be closing out a bullish position in VIX May 30 calls and opening a new one in the June 30s. 'It's not a bearish play on the VIX,' Cusick said. 'It reflects expectations for heightened volatility, which is only likely to happen if the broader market makes a significant move lower.'
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1547 ET 13April2011-Cigna draws unusual pre
expiration option action
Some option players appear to be hoping for share price gains in U.S. health insurer Cigna Corp by the end of this week. Cigna 'is seeing unusual pre-expiration option activity today with the April $45 calls seeing opening buyers,' said Patrick Mortimer, director of option trading at Pipeline Trading Systems. These bullish options, which expire this Friday after the close, have traded nearly 4,000 contracts with 97 percent of the activity on the offers, indicating they were bought. Current open interest shows just 900 contracts so these are new positions that will need Cigna to close above $45.19 on Friday to show any profits, he said. This notable activity has helped pushed Cigna's total option volume to 5.3 times its average daily contract volume with 4,896 calls and 703 puts changing hands by late afternoon, according to Trade Alert. Cigna set a new 52-week high of $44.99 on April 1. Its shares fell 0.73 percent to $44.32 late on Wednesday.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1535 ET 13April2011-O'Reilly Automotive gets put seller
trader
O'Reilly Automotive Inc fell 1 percent to $55.49 following a downgrade to 'Underweight' from 'Neutral' at JP Morgan with a price target reduction from $55 to $49. The analysts cited potential lower sales results due to rising fuel costs. Option activity on Wednesday suggests at least one investor believes the recent sell-off in the automotive parts retailer is overdone and has sold the April $55 Puts at 40 cents each, said Patrick Mortimer, director of options trading at Pipeline Trading Systems. During the session, 5,000 contracts have traded, including one block of 4,200 contracts.
With April expiration occurring this Friday after the close, this trade will see the initiator pocket the total premium of $200,000 as long as the shares close above $55 at expiration, he said. Another possible catalyst for Wednesday's trade is the fact that the shares are trading just pennies above its 200-day moving average. 'Looking at a one-year chart we see that the stock has not broken this technical level and has managed to rebound off of it numerous times over the last few months,' Mortimer said.
Reuters Messaging: doris.frankel.reuters.com@reuters.net Keywords: MARKETS STOCKSNEWS
COPYRIGHT Copyright Thomson Reuters 2011. 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 13April2011
Players eye call options on CBOE Volatility Index
The CBOE Volatility Index, or VIX, slipped 0.99 percent to 16.92 as U.S. stocks finished mostly flat. The VIX futures were also lower with both April and May futures down to 18.30 and 20.35, respectively. In VIX options, the May and June 20 calls are the busiest options as more than 100,000 contracts changed hands in each strike, according to Trade Alert.
The action includes a May-June 30 call spread and apparently bought at $1.20, which traded 45,000 times and at $1.15, which traded 28,000 times, said WhatsTrading.com options strategist Frederic Ruffy. Ruffy surmised the trade could be a possible roll of deep out-of-the-money calls from one month to the next and/or a bet that the VIX will remain tame through the May expiration, then possibly spike into mid-June.
Joe Cusick, senior market analyst at optionsXpress, also said an investor might be closing out a bullish position in VIX May 30 calls and opening a new one in the June 30s. 'It's not a bearish play on the VIX,' Cusick said. 'It reflects expectations for heightened volatility, which is only likely to happen if the broader market makes a significant move lower.'
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1547 ET 13April2011-Cigna draws unusual pre
expiration option action
Some option players appear to be hoping for share price gains in U.S. health insurer Cigna Corp by the end of this week. Cigna 'is seeing unusual pre-expiration option activity today with the April $45 calls seeing opening buyers,' said Patrick Mortimer, director of option trading at Pipeline Trading Systems. These bullish options, which expire this Friday after the close, have traded nearly 4,000 contracts with 97 percent of the activity on the offers, indicating they were bought. Current open interest shows just 900 contracts so these are new positions that will need Cigna to close above $45.19 on Friday to show any profits, he said. This notable activity has helped pushed Cigna's total option volume to 5.3 times its average daily contract volume with 4,896 calls and 703 puts changing hands by late afternoon, according to Trade Alert. Cigna set a new 52-week high of $44.99 on April 1. Its shares fell 0.73 percent to $44.32 late on Wednesday.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1535 ET 13April2011-O'Reilly Automotive gets put seller
trader
O'Reilly Automotive Inc fell 1 percent to $55.49 following a downgrade to 'Underweight' from 'Neutral' at JP Morgan with a price target reduction from $55 to $49. The analysts cited potential lower sales results due to rising fuel costs. Option activity on Wednesday suggests at least one investor believes the recent sell-off in the automotive parts retailer is overdone and has sold the April $55 Puts at 40 cents each, said Patrick Mortimer, director of options trading at Pipeline Trading Systems. During the session, 5,000 contracts have traded, including one block of 4,200 contracts.
With April expiration occurring this Friday after the close, this trade will see the initiator pocket the total premium of $200,000 as long as the shares close above $55 at expiration, he said. Another possible catalyst for Wednesday's trade is the fact that the shares are trading just pennies above its 200-day moving average. 'Looking at a one-year chart we see that the stock has not broken this technical level and has managed to rebound off of it numerous times over the last few months,' Mortimer said.
Reuters Messaging: doris.frankel.reuters.com@reuters.net Keywords: MARKETS STOCKSNEWS
COPYRIGHT Copyright Thomson Reuters 2011. 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.