Friday Options Recap: Active Trading

Sentiment

The stock market averages opened higher and are holding gains late Friday on better-than-expected jobs data. Stock index futures moved higher before the opening bell after the Labor Department said the US economy lost 36,000 jobs in February, which was significantly better than the 68,000 drop that economists had predicted. The unemployment rate held steady at 9.7 percent and average hourly earnings rose .1 percent. Economists were looking for an unemployment rate of 9.8 percent and a .2 percent increase in hourly earnings.

With not much other news to guide the market action, investors seemed to breathe a collective sigh of relief that the news wasn't worse. Crude oil jumped $1.47 to $81.68 a barrel. Gold edged up $1.70 to $1134.80 an ounce. The Dow Jones Industrial has added 125 points and the NASDAQ gained 34. With less than an hour to trade, the CBOE Volatility Index (.VIX) is down 1.48 to 17.24. Trading in the options market is active, with about 6.9 million calls and 5.5 million puts traded so far.

Bullish Flow

Best Buy (BBY) is up $1.45 to $38.60 and options volume is 3X the average daily levels, with 29,000 calls and 19,000 puts traded so far. While some of the activity in the March 38, 39 and 40 calls is likely closing, April 38, 40, and 41 calls are among the most actives. Some players are likely opening new positions ahead of Best Buy's March 25 earnings release. Plus, Apple Computer (AAPL) now says its iPad will be available in the US on April 3. According to a recent Apple Insider report, the new device will be available at a variety of different locations and not just the Apple retail store. Best Buy was mentioned. So, the gains in BBY shares and the uptick in call volume might be in anticipation of the US debut of Apple's iPad.

Bearish Flow

Royal Caribbean (RCL) is up 64 cents to $29.58 and options volume is 5X the average daily, led by a buyer of 20K June 25 puts at $1.075 per contract. It was tied to shares at $29.25 and appears to be a volatility play, the day after Goldman upped the stock to Neutral from Sell. Earnings due mid-to-late April.

Implied Volatility Movers

Apple Computer (AAPL) touched a new 52-week high and is up $8.37 to $219.07 in active trading after the company announced that its highly-anticipated iPad will hit US store shelves on April 9, then nine more markets (Reuters). In the options market, trading is brisk, with 270K calls and 152K puts traded. None of today's trades have been greater than 1000 contracts and much (244K) has been in the front-month. Meanwhile, implied vols have risen about 2.7 percent to 24.8 percent -- now coming off multi-month lows.

Unusual Volume Movers

Apple Computer (AAPL) is seeing 2X average daily trading volume, with 422,000 contracts traded and call volume representing about 64 percent of today's activity.

Intermune (ITMN) is seeing 13X average trading volume, with 253,000 contracts traded and calls representing 57 percent of today's trading activity.

Ciena (CIEN) is seeing 8X normal trading volume. 124,000 contracts traded, with call options representing about 58 percent of today's volume.

Unusual volume (two times or more than normal average volume) is also being seen in Alcoa (AA), AK Steel (AKS), and CF Industries (CF).