Wednesday Options Recap
Frederic Ruffy submits: SentimentStocks slipped on higher bond yields Wednesday. The table was set for morning gains on Wall Street after data showed the Consumer Price Index [CPI] up .1 percent in November, which was half as much as expected, and a separate report showed the NY Empire Index with surprise improvement to 10.57 in December, from –11.14 the month before. Economists were looking for the gauge of regional manufacturing activity to improve to 3.0. The latest Industrial Production report showed an uptick of .4 percent in November and slightly better than forecasts (.3 percent). However, the NAHB Homebuilder Sentiment Index [HMI] showed no improvement in December. It remained unchanged at 16, compared to economist forecasts of 17. Meanwhile, the benchmark ten-year Treasury, which moved up early, is back under pressure and lost another 8/32nd after the Senate passed the tax cut compromise. The yield on the ten-year is now at four-month highs of 3.52 percent, from about 2.95 percent last Monday. The relentless rise in yields is weighing on equities. The Dow Jones Industrial Average has given up early gains and is down 10 points. The NASDAQ lost 11. With forty-five minutes left to trade, the CBOE Volatility Index (.VIX) is up .42 to 18.03 and well off session lows of 17.37. Trading in the options market is running about typical levels, but likely to pick up tomorrow due to the upcoming quadruple witch expiration. 7.1 million calls and 5.5 million puts traded so far.Bullish FlowExxon Mobile (XOM) loses 20 cents to $71.98 and is one of 18 Dow stocks trading lower late-Wednesday. Earlier in the session, a block of 20000 Jan 72.5 calls traded at $1.26 on ISE. An opening customer buyer initiated the trade, according to ISEE data. Doesn't look tied and appears to be a bullish play on the oil giant. Shares gapped higher when earnings were last reported on 10/28 and are up nearly 10 percent since that time. Meanwhile, crude (Jan) hit a high of $89.09 on bullish inventory data today, and was recently up 25 cents to $88.53 a barrel. Complete Story »
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