Mid-day Flow Summary: NFLX, BMY & General Market Sentiment

Netflix  (NFLX)
The stock is up more than 4% to $22.05 this morning on rumors that Amazon might be interested in the firm. As you might expect, option activity has picked up accordingly.  At noon there were 43,000 contracts on the tape, or nearly 18 times the average daily option volume.  Not surprisingly, calls are nearly all of the activity and buyers dominate the flow.  

A large buyer emerged in September 35 calls in BMY this morning.  Just after 10am, 25,000 were bought on the ARCA exchange for $.42.5. The stock is trading down slightly, near $30.28, and earnings are expected in late July.

An examination of the trades since April, and the current open interest of 59,000 contracts, suggests that a trader is building an upside position in BMY.  This is in anticipation of a continued rally (stock was $4 lower in January) or an earnings or news-related upside event.

General Sentiment
This has been a very busy morning as the US markets sold-off in the wake of Europe's decline.  Among all listed options today (index, etf, and equity) approximately 3.3 million calls and 3.3 million puts have traded by noon, for an industry put/call of 1.02.  This is much more bearish than recent levels when calls outnumbered puts 2 to 1. 

The majority of the order flow is characterized by put buyers and call sellers. The CBOE VIX index up 1.20 to 14.83.  This reflects an increased concern about future market volatility.

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.