Mid-day Flow Summary: General Sentiment, NEM & DELL
General Sentiment
With the broad market selling off more than 1% this morning, the options volume has picked up a bit from recent days. It looks to be on pace to exceed 10 million contracts for the first time in several days. 4.5 million contracts have traded by noon, with some interesting two-way activity in a number of drug and financial names. The CBOE VIX is higher on the selloff and is up 8.5% to 24.66.
Newmont Mining (NEM)
NEM is having an active day, with stock up more than 4% to $41.75 on takeover chatter. In addition, options trading is at 4 times their usual level. The flow is characterized by very aggressive upside call buyers lifting offers on 42.5, 45, and 50 strike calls.
More than 30,000 of the September 45 calls have traded this morning, at prices ranging from $.25 to more than $1. The stock has swung from the $40 range to a high of $42.70 earlier this morning.
Dell Computer (DELL)
Dell is trading actively today ahead of Thursdayís earnings. The stock is trading down 1.7% to a current level of $27.12, and the option flow is generally bearish.
Traders are selling September 27.5 and 30 calls and buying November 30 puts. This flow continues activity which was seen yesterday. It has resulted in a significant open interest position of more than 40,000 September 27.5 calls.
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About Henry Schwartz
Henry Schwartz has traded derivatives on US and European exchanges for nearly 20 years. His experience includes market-making and institutional trading at the Hull Group, Salomon Brothers, Bear Stearns and most recently Banc of America Securities, where he led the electronic market-making project coincident with the launch of the ISE. His current work involves real-time stream analysis of options market activity for a number of leading institutional sell-side firms.
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