Mid-day Flow Summary: General Sentiment, HD & MO
General Sentiment
Another quiet day starts this pre-holiday week. The broad indexes are currently lower by nearly .8%. The total option volume is just 3.5 million contracts traded by noon, or 66% of the recent averages. The CBOE VIX is at 22.45. The general sentiment is slightly bullish, with 1.9 million calls versus 1.6 million puts on the tape.
Home Depot (HD)
The most active single name today is Home Depot. This is on news that the wholesale unit divestiture price was cut. The stock is up nearly 2% to $35.36.
The option volume is concentrated in the 45 strike synthetic stock positions. These can be used by arbitrage accounts to adjust their exposure regarding rights and tender issues.
Altria Group Inc (MO)
The wires are reporting a Wednesday decision to spinoff the tobacco business. This is giving the stock a boost to current level of $70.65. Altria options are trading more than double their average pace, with just over 50,000 contracts traded by midday.
Activity is focused in September 70 calls where a consistent buyer has been active. More than 22,000 contracts have changed hands at prices from $1.35 to $2.05. The implied volatility in these options has lifted from the 21% range to current high of 24% as traders anticipate some increased action in the stock this week.
"
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.
View Henry Schwartz's post archive >
