Mid-day Flow Summary: General Sentiment & JetBlue Airways (JBLU)
General Sentiment
Choppy trading persists today, albeit a bit less extreme than yesterdayís wild 2% swings. The broad averages are nearly 1% lower, as Wachovia Bank announced the latest write down, and traders brace for more bad news. The option sentiment is generally bearish with puts trading more actively than calls.
The CBOE VIX continues to edge higher, now at 27.74, as buyers with a desire to hedge their portfolios bid premiums up. Options volume continues strong and we will most likely see another 20 something million contract day on the heels of yesterdayís new record of 23 million.
JetBlue Airways (JBLU)
The stock is lower by 10% on the resignation of the CFO. The current level is just below $7 which is $10 off the high set in January of this year. Options are trading triple their normal volume and dominated by put buyers and call sellers who appear to be looking for continued pressure on the stock.
November 7.5 put is the most active option, with buyers paying $.35 to $.70 over the course of the morning with nearly 3,000 on the tape. Algorithmic order routers are being used by sophisticated customers to maximize liquidity in this jittery market. They are purchasing downside and upside exposure, with sweeps to buy close to 800
December 5 puts for a nickel, and 700 Dec 7.5 calls for $.35. This activity suggests JBLU will exhibit much greater price variation than seen in past months.
Posted By: Trade Alert
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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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