Safeway (SWY) overall option implied volatility of 28 is near its 26-week average of 29, according to Track Data, suggesting nondirectional movement into its March 9 analyst meeting.

Nokia (NOK) volatility is near ten-month lows. Nokia April and July put option implied volatility is at 38, below its 26-week average of 44, according to Track Data, suggesting decreasing price movement.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

Options Update: Safeway Volatility Flat into Analyst Meeting originally appeared on BloggingStocks on Sat, 05 Mar 2011 08:10:00 EST. Please see our terms for use of feeds.

In the wake of Friday's drastic pullback in the stock market, it looks like at least one trader is banking on more short-term volatility. Bright and early Monday, a spread speculator constructed a long straddle on the PowerShares QQQ Trust (QQQQ), with the trader hoping to capitalize on a substantial price swing over the next several weeks.

Specifically, the trader purchased a block of 1,205 February 56 calls, and simultaneously bought a matching block of 1,205 February 56 puts. QQQQ was hovering right at $55.69 at the time of these transactions, placing both strikes very near the money.

Continue reading Straddle Player Bets on Big Volatility for PowerShares QQQ Trust

Straddle Player Bets on Big Volatility for PowerShares QQQ Trust originally appeared on BloggingStocks on Mon, 31 Jan 2011 10:30:00 EST. Please see our terms for use of feeds.

Friday morning, the good folks at JPMorgan Chase (JPM) kicked off a wave of quarterly reports from the banking sector. Next week, we'll hear the latest earnings results from the likes of Citigroup (C), Goldman Sachs (GS), and Wells Fargo (WFC), just to name a few.

Of course, the biggest bank in the nation -- Bank of America (BAC) -- also has a quarterly report on deck. Ahead of next Friday's fourth-quarter release, one speculator opted to construct a high-volatility options strategy on BAC.

Continue reading Bank of America Singled Out for a Long Strangle Ahead of Earnings

Bank of America Singled Out for a Long Strangle Ahead of Earnings originally appeared on BloggingStocks on Fri, 14 Jan 2011 12:30:00 EST. Please see our terms for use of feeds.

Deere (DE) is recently up 6% after the U.S. lowered its outlook for corn and wheat production. Call option volume of 21K contracts compares to put volume of 19K contracts. October put option implied volatility is at 29, November is at 32, December is at 33, verses its 26-week average of 35, according to Track Data, suggesting decreasing price movement.

CSX Corp. (CSX) is expected to report Q3 EPS on October 13. October put option implied volatility is at 37, January is at 33, near its 26-week average, according to Track Data, suggesting nondirectional price risk.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

Options Update: Deere and CSX Corp. Volatility Flat originally appeared on BloggingStocks on Sun, 10 Oct 2010 09:10:00 EST. Please see our terms for use of feeds.

Continue reading Green Mountain Coffee's SEC Woes Inspire a Bearish Strangle

Green Mountain Coffee's SEC Woes Inspire a Bearish Strangle originally appeared on BloggingStocks on Wed, 29 Sep 2010 14:30:00 EST. Please see our terms for use of feeds.

Option volume was relatively quiet in Citigroup Inc. (C) on Tuesday, with call and put activity both falling short of the expected daily levels. However, a noteworthy volatility play crossed the tape around midday, with one long-term speculator betting on a significant price swing from the bailed-out bank.

Shortly after noon, a block of 10,000 March 2011 4-strike puts traded at the ask price, suggesting they were purchased, while a matching block of 10,000 March 2011 5-strike calls changed hands at the ask price. Open interest at both strikes swelled overnight by more than 10,000 contracts apiece, confirming these were all freshly opened positions.

Continue reading Citigroup Singled Out for a Long-Term Strangle

Citigroup Singled Out for a Long-Term Strangle originally appeared on BloggingStocks on Wed, 11 Aug 2010 11:40:00 EST. Please see our terms for use of feeds.

Continue reading Options Player Strangles Valero Energy

Options Player Strangles Valero Energy originally appeared on BloggingStocks on Thu, 05 Aug 2010 13:40:00 EST. Please see our terms for use of feeds.

American Axle & Manufacturing Holdings (AXL) is prepping for its turn in the earnings spotlight. The auto parts issue is slated to confess its second-quarter results ahead of Friday's opening bell, and at least one speculator is looking for a major post-event move from the shares. Bright and early Thursday morning, an ambivalent options trader opened an at-the-money straddle on AXL.

Specifically, the trader simultaneously purchased several matching blocks of August 9 puts and calls. With AXL trading just pennies above $9, both of these options are at the money. By scooping up equal numbers of puts and calls at the same strike, the trader is hoping to capitalize on a drastic move higher or lower from the security.

Continue reading American Axle Targeted by a Pre-earnings Straddle

American Axle Targeted by a Pre-earnings Straddle originally appeared on BloggingStocks on Thu, 29 Jul 2010 12:00:00 EST. Please see our terms for use of feeds.

The S&P 500 Index (SPX) has battled back from its brutal month-long sell-off, but it seems that traders aren't exactly confident in the market's fledgling rebound. According to data from the Chicago Board Options Exchange (CBOE), options players are betting on additional turbulence by purchasing calls on the CBOE Market Volatility Index (VIX).

During the past five sessions, speculators on the exchange have scooped up 142,544 calls on the VIX, along with 126,391 puts. In other words, 1.13 calls have been purchased for every put on the VIX, which is meant to reflect investors' expectations for the SPX's near-term price action.

Continue reading Traders Bet on More Volatility with VIX Calls

Traders Bet on More Volatility with VIX Calls originally appeared on BloggingStocks on Thu, 17 Jun 2010 12:30:00 EST. Please see our terms for use of feeds.

If you've been watching the market at all during the past month, you probably know that "volatility" is the prevailing theme. With uncertainty on the rise among investors, one option strategist on Thursday initiated a directionally neutral bullish volatility spread on coal concern Peabody Energy (BTU).

Specifically, the trader bought to open a block of 5,000 July 41 calls, and simultaneously bought to open an equivalent number of July 38 puts. BTU was trading just shy of $40 at the time these transactions occurred, placing both options out of the money. In other words, this appears to be the initiation of a long strangle on the stock.

Continue reading Betting on Volatility with a Peabody Energy Strangle

Betting on Volatility with a Peabody Energy Strangle originally appeared on BloggingStocks on Fri, 11 Jun 2010 13:00:00 EST. Please see our terms for use of feeds.

Options Update: Oil Services Volatility Increases with Drilling Uncertainty originally appeared on BloggingStocks on Fri, 11 Jun 2010 08:30:00 EST. Please see our terms for use of feeds.

Last week's ratification of the Durbin Amendment by U.S. lawmakers seemed to put Visa (V) on edge, with the credit card company now facing the prospect of curtailed interchange fees. (Of course, the firm's written statement cited concerns about potential harm to consumers -- a nice touch.)

So, with the forecast looking gloomy on the home front, perhaps it's no surprise that Visa is now trying to woo another major world power. According to Japan's The Nikkei, Visa "will urge the Japanese government to use credit cards for all of its purchases, from stationery items to parts for fighter jets, saying it would save the country a lot of money."

Continue reading Visa Execs Launch Full-Court Press on Japanese Government

Visa Execs Launch Full-Court Press on Japanese Government originally appeared on BloggingStocks on Mon, 24 May 2010 15:40:00 EST. Please see our terms for use of feeds.

McDonald's (MCD) shares dropped a whopping 1.29% Friday on news that Paris Hilton is setting aside her fast-food habit in exchange for a bikini-ready body. Paris is quoted by Starpulse.com as stating: "I've been really working out. I'm not eating fast food anymore. No more McDonald's. (I'm) getting my bikini body, so I'm about that." This must come as a serious blow to McDonald's.

Well okay, perhaps Paris Hilton's declaration isn't really all that important to McDonald's shareholders, but the truth remains that MCD shares are again showing signs that they have peaked. The question is why? The company's share price is currently hitting strong resistance in the range of $71, and the three key reasons are fierce competition, international monetary exchange instability, and operating expense volatility.

Continue reading Paris Hilton Trades McDonald's for Bikini

Paris Hilton Trades McDonald's for Bikini originally appeared on BloggingStocks on Sat, 15 May 2010 14:40:00 EST. Please see our terms for use of feeds.

Option traders are pushing up call option prices in the Processed & Packaged Goods industry and are pushing up put option prices in the Packaging & Containers industry.

Any time the volatility skews above 1.00, it is an indication that calls are more expensive than puts. Typically, when calls are more expensive than puts, it means the demand for calls is greater than the demand for puts because investors believe the stock is going to rise in the future and they want to take advantage of that movement by buying calls.

The opposite is also true. Any time a volatility skews below 1.00, it is an indication that puts are more expensive than calls.

Continue reading McCormick Tops Bullish Volatility Skews, Bemis Tops the Bearish Ones

McCormick Tops Bullish Volatility Skews, Bemis Tops the Bearish Ones originally appeared on BloggingStocks on Fri, 14 May 2010 11:20:00 EST. Please see our terms for use of feeds.

Premium selling is pushing the CBOE Market Volatility Index (VIX) lower today - after a massive spike of more than 85% last week, the so-called "fear barometer" is down more than 25% today! Of course for the VIX to drop, option investors have to be doing something on their end. And they appear to be doing a lot of premium selling in an attempt to cash in on high volatility levels while the getting is good.

Continue reading Option Selling in Qualcom (QCOM), Others, Sends VIX Lower

Option Selling in Qualcom (QCOM), Others, Sends VIX Lower originally appeared on BloggingStocks on Mon, 10 May 2010 15:30:00 EST. Please see our terms for use of feeds.

Is General Electric (GE) on the verge of a major price swing? At least one options player seems to think so. Last Friday, the blue-chip conglomerate was singled out for a long-term straddle, with the trader zeroing in on GE's December series.

Specifically, the speculator simultaneously purchased 5,000 December 20 puts for $2.41 each, and purchased 5,000 December 20 calls for $1.20 a pop. Open interest at both strikes surged by well over 5,000 contracts over the weekend, confirming that this was a freshly opened long straddle. The position was initiated for a net debit of $3.61 per pair of contracts.

Continue reading Straddle Trader Bets on Volatility from General Electric

Straddle Trader Bets on Volatility from General Electric originally appeared on BloggingStocks on Mon, 26 Apr 2010 12:30:00 EST. Please see our terms for use of feeds.

United Airlines parent UAL Corp. (UAUA) was singled out for a directionally neutral spread strategy on Wednesday, with one options trader betting on near-term volatility for the airline issue. Shortly after the opening bell, a block of 325 contracts changed hands on UAUA's June 24 call for the ask price of $1.32, indicating they were purchased. Simultaneously, a matching block of 325 June 16 puts traded at the ask price of $0.50, revealing these contracts were also bought.

Continue reading Strangle Player Bets on a Big Move for UAL Corp.

Strangle Player Bets on a Big Move for UAL Corp. originally appeared on BloggingStocks on Thu, 15 Apr 2010 12:40:00 EST. Please see our terms for use of feeds.

Are shares of The Coca-Cola Company (KO) poised for a technical breakout? One options trader seems to think so -- during the course of Monday's trading, a long strangle was opened on the blue-chip soda stock. In this two-legged spread, the direction of the stock's move doesn't matter -- only its magnitude.

Specifically, a block of 422 April 52.50 puts traded at the ask price of $0.68 around midday Monday. Simultaneously, a matching block of 422 April 55 calls changed hands at the ask price of $0.46. Implied volatility rose with each transaction, and open interest at both strikes rose overnight, confirming that these were newly opened positions.

Continue reading Option Player Strangles Coca-Cola Company

Option Player Strangles Coca-Cola Company originally appeared on BloggingStocks on Tue, 16 Mar 2010 13:00:00 EST. Please see our terms for use of feeds.

CME Group, Inc. (CME) announced it has entered into a seven-year license agreement with the Chicago Board Options Exchange that will allow CME Group to list futures and options on futures for volatility indexes on a variety of asset classes. These contracts will be listed with, and subject to, the rules and regulations of the particular exchange where the products will be traded.

CBOE Volatility Index: The VIX was down 1.38 to 17.34.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

Options Update: CME Group Enters into Seven-Year Licensing Agreement with CBOE originally appeared on BloggingStocks on Fri, 05 Mar 2010 17:30:00 EST. Please see our terms for use of feeds.

Continue reading Abercrombie (ANF) Looking Rangebound?

Abercrombie (ANF) Looking Rangebound? originally appeared on BloggingStocks on Thu, 18 Feb 2010 14:30:00 EST. Please see our terms for use of feeds.