Unusual Options Activity Review: KSS, F, APKT, OCN, HPQ, HCA, CBG, LYV, VIX, SPX, GLD

Wednesday's Bullish Trading
Kohl's (KSS) saw a second day of active trading. 4,100 calls and 1,600 puts traded on the stock Tuesday. Shares jumped $1.30 to $52.24 Wednesday and the action continued. About 19,000 calls and 5,900 puts traded on the retailer, which is 8.5X the daily average for Kohl's. October 52.5 calls on KSS are now 26 cents out-of-the-money and expiring in 16 days. 9,520 contracts changed hands. October and November 55 calls were the next most actives. It's not clear what is motivating the increased interest in Kohl's options this week, as there have been no company headlines. Some investors might be anticipating good news when the company, along with a host of other retailers, releases September monthly same store sales results Thursday morning.

Bullish trading was also seen in Ford Motor (F), Acme Packet (APKT), and Ocwen Financial (OCN).

Wednesday's Bearish Trading
Hewlett Packard (HPQ) dove $2.22 to $14.91 and to its lowest levels since 2002 Wednesday. The stock came under fire midday and closed near session lows after the computer-maker provided guidance at its 2012 Analyst Day. The company's CEO said she expects revenues to track GDP growth through 2016. Investors seemed displeased with the news, as the stock fell on heavy volume of 140 million shares. Options volume jumped to 8X the daily average. 234,000 puts and 172,000 calls traded on HP Wednesday. November 17 and October 16 puts were the most actives in the name.

Bearish trading was also seen in HCA, CBRE Group (CBG), and Live Nation (LYV).

Index Recap
Overall options volumes in the index remain light and volatility stayed at low levels. CBOE Volatility Index (.VIX) edged down .28 to 15.42 after the S&P 500 Index (.SPX) added 5.24 points to 1450.99. Volume in VIX, the S&P 500 Index and other cash indexes was about 482,000 calls and 548,000 puts, which is well off the recent average daily volume of 1.4 million contracts, according to Trade Alert data. There's not much hedging activity being seen in the options market so far in October; which is interesting because it is one of the more historically volatile months of the year for the equity market. Key monthly jobs data Friday might shake things up before the weekend.

Analyzing the ETF Market
SPDR Gold Trust (GLD) ticks 31 cents higher to $172.41 after the yellow metal moved up $5 to $1780.5 an ounce. The largest options trades on GLD today were part of a spread, in which the investor apparently bought 10,700 December 170 calls on the ETF for $6.50 and sold 10,700 March 190 calls at $2.91. The December 170 – March 190 call spread, for $3.59, is possibly a position adjustment because open interest is sufficient to cover in both contracts. If opening, it's a bullish play on the metal and a view that shares will continue to move higher through the December expiration, but GLD will not rally beyond $190 through the March 2013 expiration. The Gold Fund is an exchange-traded product that represents ownership in the actual physical commodity – which is stored in bank vaults.

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About Joseph Cusick

Joseph Cusick currently serves as the Senior Vice President of Education and a Senior Market Analyst for optionsXpress. Mr. Cusick seeks out common sense and technologically scalable educational pathways for self-directed investors of all experience levels. He is largely responsible for ramping up delivery of online and offline seminars to customers and potential clients worldwide. Prior to serving in his current role, Mr. Cusick immersed himself in the broker side of optionsXpress by managing his own book of business. Prior to joining optionsXpress, Mr. Cusick served as a market maker and portfolio manager at the Chicago Board of Options Exchange. Joseph is a graduate of Marquette University and holds his Series 4, 7 and 63 registrations with FINRA.