Stock market averages finished higher with help from earnings Wednesday. Boeing (BA) shares jumped 5.3 percent and led the Dow Jones Industrial Average after the company's earnings topped forecasts. Apple Computer (AAPL) shares rallied $49.72 to $610 and helped the NASDAQ after the company's earnings blew past Street estimates. On the economic front, a report on Durable Goods released early Wednesday was down to -4.2 percent in March and well below economist estimates of -1.7 percent. Attention later shifted to the Federal Reserve's monetary policy meeting. The Fed concluded the meeting and issued a statement that seemed a bit more hawkish than in March. Officials noted moderate economic growth and modest signs of inflation. The talk seemed to dash some hopes for another round of Quantitative Easing [QE3]. But, while bonds and gold slipped a bit, the Dow held steady and finished the day up 89 points. The tech-heavy NASDAQ surged 68 points.
Watson Pharmaceuticals (WPI) was up $1.09 to $69.69 in active trading of 2.95 million shares Wednesday. Options volume on the generic drug-maker was 2X the daily average. 16,000 calls and 1,900 puts traded on the stock today. May 80 calls, which are 14.8 percent out-of-the-money and expiring in 23 days, were the most actives. 10,275 traded. May 70 and 75 calls were busy as well and levels of implied volatility in options on WPI were up 9 percent to 40.5, as some upside call buyers were apparently taking positions on hopes for short-term strength in the stock. The timing seems very good so far. WPI is up $73.20 in extended hours trading Wednesday on news it is buying Swiss-based Actavis. The deal is expected to be 30 percent accretive to the company's 2013 Earnings Per Share.
Gap Stores (GPS) moved to new 52-week highs today and was up 70 cents to $27.89. One or more investors are possibly looking to hedge recent gains in the stock as May 24 – 26 put spreads on the retailer were busy today. One player bought the spread for 32 cents, 8500X (bought 8,500 May 26 puts for 42 cents per contract and sold the 24s for a dime). The spread traded 10000X on the day and appears to be opening activity. The bearish flow might be to hedge stock ahead of event risk – including April same store sales due next Thursday and Gaps' earnings on 5/17.