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Unusual Options Activity Review - IMAX, MCK, AMAT, JDSU, PENN, FOE, MU, VCLK, VIX, GLD

Bullish Flow

IMAX Corporation (IMAX) added 50 cents to $10.77 and options volume rose to 6X the average daily levels Tuesday. There was no company specific new to explain the action Tuesday, but sentiment seemed decidedly bullish amid increasing interest in March 12.5 and November 10 calls. 3,780 March 12.5s traded and, with 62 percent hitting ask-side and open interest of 1,700, it appears that call buyers were initiating the trades and opening new positions. The gains in the shares and bullish options activity comes ahead of a November 5 (before market) earnings release.

Bullish trading also surfaced in McKesson (MCK), Applied Materials (AMAT), and JDS Uniphase (JDSU).


Bearish Flow

Penn National Gaming (PENN) gained 70 cents to $26.20, but options trading turned defensive Tuesday, as investors await the outcome of an Ohio election that would legalize four full service casinos. Two would be operated by PENN and so the casino-operator has a lot at stake. Shares finished up, but some investors were actively buying November 22.5 and December 25 puts to hedge their bets; as the stock might slide if voters reject plans for the Ohio casinos.

Bearish trading also surfaced in Ferro Corp. (FOE), Micron Technology (MU),
and ValueClick (VCLK).

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Index Trading

Trading was relatively quiet in the index market, as many investors are taking a wait-and-see approach ahead of the Fed's meeting on interest rates Wednesday and key economic data later in the week. Monthly jobs numbers are due Friday. The CBOE Volatility Index (VIX) edged down .97 to 28.81. Meanwhile, 603,000 index puts and 331,000 index calls traded across all index products, which represents about 85 percent the normal volume.


ETF Trading   

SPDR Gold Fund (GLD) saw a surge of activity after gold rallied to new highs Tuesday. December gold finished the day up $31.20 to $1085.20 an ounce. GLD, which holds gold bullion stored in bank vaults, hit a new 52-week high and finished the day up $2.51 to $106.46. Total volume in the gold fund hit nearly 300,000 contracts after 177,000 calls and 114,000 puts traded on the session.

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