Daily Stock Options Recap – September 8, 2010

Sentiment

Major averages followed the euro lower Tuesday on renewed concerns about European banks. With no earnings or economic data to guide the action, the focus shifted to overseas news and reports that European banks have more risky debt than previously estimated during “stress tests” earlier this year. The news sent the euro down 1 percent against the buck and, as the European currency erased hard fought gains, shares of European banks finished Tuesday’s session with losses. US stocks followed suit and American Express (AXP) is down 3.75 percent and leading the Dow Jones Industrial Average to a triple digit loss. With less than an hour to trade, the NASDAQ is down 26 points. The CBOE Volatility Index (.VIX) rallied 2.51 to 23.82 and near session highs. The tone of trading is cautious, with about 4.35 million calls and 4.1 million puts traded so far.

Bullish Flow

Oracle (ORCL) is seeing relative strength and increasing options activity on news Mark Hurd, a former H-P CEO, has joined the software maker as President and member of Board of Directors. Goldman also added ORCL to its Conviction Buy List today. Shares are up $1.34 to $24.26 and options volume is running 2X the average daily, with about 44K contracts traded (through 12:30 ET.) Sep 25 calls and Sep 24 puts are the most actives. 27K calls and 17K puts traded total. Implied volatility is up about 8 percent to 34.

Bearish Flow

Corning (GLW) adds 9 cents to $16.90 and the Feb 15 – 19 strangle is bought at $1.82, 3600X on AMEX. Looks like an opening volatility play on the glass maker. Meanwhile, other investors are focused on the Sep 17 puts, with 8,550 traded vs. 5,823 in open interest. The top trade is 2937 at 52 cents on ISE, when bid-ask was 51 to 53 cents. It’s not clear if it was buyer or seller initiated, but implied volatility is up 5 percent to 35.

Implied Volatility Mover

Corning (GLW) adds 9 cents to $16.90 and the Feb 15 – 19 strangle is bought at $1.82, 3600X on AMEX. Looks like an opening volatility play on the glass maker. Meanwhile, other investors are focused on the Sep 17 puts, with 8,550 traded vs. 5,823 in open interest. The top trade is 2937 at 52 cents on ISE, when bid-ask was 51 to 53 cents. It’s not clear if it was buyer or seller initiated, but implied volatility is up 5 percent to 35.