Market Summary

Stock market averages opened higher on hopes for the Eurozone, slipped on disappointing domestic economic news, but then finished mixed Tuesday. The table was set for morning gains on Wall Street after European equity markets moved higher on hopes for an agreement between Greece and its creditors. France led the advance with a gain of 1.3 percent. The Dow Jones Industrial Average opened higher and was sporting a modest gain heading into the latest Chicago Purchasing Managers Index, which fell to 60.2 in January. Economists were expecting the gauge of manufacturing activity to increase to 62.8, from 62.2 the month before. Making matters worse, an index of Consumer Confidence fell to only 61.1in January, from 64.8 in December. Economists were expecting an increase to 67.0. The Dow Industrial Average gave up its modest morning gain and was in the red through midday. From there, trading was choppy and range-bound. At the closing bell, the Dow Jones Industrial Average had trimmed its loss to only 21 points. The tech-heavy NASDAQ added 1.9 points. For the month, the Dow added 3.4 percent and the NAZ gained roughly 8 percent.

Bullish Trends

Bank of America (BAC) added .9 percent to $7.13 and was one of 16 Dow stocks moving higher on day of mixed trading Tuesday. BAC had a good month and is now up 28.2 percent year-to-date. One larger player in the options market seems to be anticipating gains for the bank and bought a hefty block of call options on the stock. In midday trading Tuesday, 62,500 April 8 calls were bought not Bank of America for 28 cents per contract. The block looks like a new position because volume exceeds the open interest. It wasn't a straight bullish strategy alone, however, as it was also tied to 2 million shares (sold short) of BAC. Nevertheless, April 8 calls are 12.2 percent out-of-the-money and today's buyer appears to be anticipating a move beyond that level through mid-April.

Bullish trading was also seen in FMC Consulting (FTI), BP, and Peabody Energy (BTU).

Bearish Trends

While one strategist was building a bullish trade in Bank of America, another initiated a bearish spread on JP Morgan (JPM) Tuesday. Shares also helped the Dow and added .8 percent to $37.30 on the day. In options action, one investor bought 20,000 June 35 puts for $2 per contract and sold 20000 June 27 puts at 54 cents. The Jun 27 – 35 put spread, for a $1.46 debit, appears to be a new position, as volume exceeds open interest in both contracts. If so, it's a bearish play that makes its best profits if shares fall to $27 or more through mid-June, which represents a 27.6 percent tumble from current levels. The stock has performed well lately, up 31.4 percent since 11/23. The spread trader is possibly a shareholder initiating the bearish play to help hedge shares from a possible move lower in the months ahead.

Bearish trading was also seen in Exeo Resources (XCO), Covanta (CVA) and Louisiana Pacific (LPX).

Market Summary

Stock market averages finished higher Wednesday after the Federal Reserve concluded its latest meeting on interest rates and signaled no change to monetary policy. Instead, Fed officials rehashed concerns about the weak economy and pledged to keep rates low for the foreseeable future. In other economic news, data released Wednesday morning showed Pending Home Sales down 3.5 percent in December and .5 percent more than expected. The market showed virtually no reaction to the numbers. Earnings news was mixed. While strong results from Apple Computer (AAPL) helped keep the tech-heavy NASDAQ above water through midday, the Dow Jones Industrial Average was weighed down post-earnings weakness in Boeing (BA). However, stock market averages ticked higher on the FOMC news Wednesday afternoon and the rally was extended in the final hour. At the end of the day, the Dow Jones Industrial Average was up 83 points on the day and 180 points off session lows. The tech-heavy NASDAQ tacked on 31.7 points.

Bullish Trends

Plains Exploration (PXP) gained 94 cents to $38.18 and recovered nearly all of the 2.5 percent loss suffered Tuesday - when JP Morgan downgraded the stock to Neutral from Buy. The firm maintained a $46 Price Target on the stock. Shares bounced back from the negative commentary Wednesday and options volume on the Houston, TX oil and gas company hit 10X the daily average. 29,000 calls and 9,740 puts traded in the name. One noteworthy trade surfaced in afternoon action after one investor apparently sold 7,500 March 33 puts on PXP at 61 cents per contract, bought 7,500 March 40 calls for $1.36 and sold 15,000 March 44 call at 34 cents. In essence, Mar 33 puts were sold at 61 cents to buy a Mar 40 – 44 (1X2) call ratio spread for 68 cents. A seven-cent net debit was paid. The position looks opening and seems to be view that the stock might move towards $44 through the March expiration, which represents a 15.2 percent rally over the next 51 days. The debit is at risk if shares hold below $40 and all the options expire worthless. The strategist will face assignment on the puts if the stock falls below $33, or a decline of 13.6 percent. There is also additional risk to the upside, as only half of the March 44 calls (which were sold) are covered by the Mar 40s, that were bought.

Bullish trading was also seen in Beazer Homes (BZH), Delta Airlines (DAL), and US Airways (LCC).

Bearish Trends

RR Donnelly (RRD) shares edged 12 cents lower to $11.82 and options volume on the Chicago-based print company hit 10X the daily average, with 26,000 puts and 600 calls traded in the name Wednesday. The largest trade surfaced midday when one player bought 8,300 June 8 puts on the stock for 30 cents per contract. At the end of the day, 15,000 RRD Jun 8 puts traded against only 16 contracts of open interest. So investors were apparently buying to open new positions in these deep out-of-the-money puts on RRD. June 7, 9 and 10 puts on the stock were busy as well and implied volatility was up 7.5 percent 38. The stock tanked 15.8 percent after the company issued profit margin guidance last week. Today's put buyers might be bracing for another round of volatility in shares when the company reports results on February 22.

Bearish trading was also seen in Radian (RDN), Sprint Nextel (S), and Netease (NTES).

Market Summary

Mixed trading continued Monday. With no economic data until Wednesday's report on Pending Home Sales and only a handful of earnings reports, there wasn't much news to guide the morning action on Wall Street. Trading was orderly across the Eurozone despite ongoing concerns about the debt crisis. The euro traded up .7 percent to 1.3025 against the buck and equity markets moved modestly higher in France in Germany. Meanwhile, crude oil was up $1.43 to $99.76 and gold gained $13.3 to $1677.30 an ounce. On Wall Street, the Dow Jones Industrial Average lost 11 points and the tech-heavy NASDAQ gave up 2.5. However, the S&P 500 gained .62 points to 1,316.00.

Bullish Trends

Hovnanian Enterprises (HOV) lost 6 cents to $2.36 and options on the homebuilder were actively traded today. About 10,000 calls and 850 puts traded, which is 4.5X the daily average for the stock. The top trade was a 910-lot of February 3 calls traded at the 10 cent asking price. At the end of the day, 5,900 February 3 calls traded on the stock against 1,440 in open interest. The contract is 27.1 percent out-of-the-money and expires in 25 days. February 2.5, March 3, and March 3.5 calls on HOV were busy as well. Upside call buyers were apparently driving the flow in the name today and implied volatility was up 15 percent to 108. The bullish action might be a play on the stock's recent resurgence. Although down today, HOV has surged 62.7 percent so far in 2012. Yet, shares are still 44.6 percent below the levels seen a year ago.

Bullish trading was also seen in Chesapeake (CHK), Marvell Technology (MRVL), and Znga (ZNGA).

Bearish Trends

Pre-earnings action is picking up in Starbuck's (SBUX). Shares lost 81 cents to $47.34 today ahead of earnings, which are due out Thursday afternoon. 18,000 puts and 11,000 calls traded on the stock. Most of today's options action was in smaller sizes. The largest trades were part of a spread, in which the investor bought 203 February 48 puts on the stock for $1.80 and sold 203 February 44 puts at 41 cents. This Feb 48 – 44 put spread, for a $1.39 net debit, traded multiple times today and volume in both contracts was more than 3,300. Some investors might have been buying this out-of-the-money put spread to help hedge the stock ahead of the report. Like many other companies, SBUX can sometimes see a volatility reaction to the earnings release. For example, the stock jumped 6.7 percent the last time the company reported on 11/4/11.

Bearish trading was also seen in McMoran (MMR), Deans Foods (DF), and Gannett (GCI).

Market Summary

Stock market averages were range bound and finished with slim gains on a heavy news day. Economic data painted a mixed picture. A report released before the bell showed Weekly Jobless Claims falling by 50,000 to 352,000 in the second week of January, which was significantly better than the 385,000 that was expected. A separate report from the Labor Department indicated the Consumer Price Index [CPI] was flat in December. Economists were looking for an increase of .1 percent. But Housing Starts fell to an annual rate of 657K in the final month of 2011, down from 685K in November and well below economists' estimates of 680K. The Philly Fed Survey for January was also worse-than-expected, improving to only 7.3, from 6.8 in December and below expectations of 10.0. At the same time, BofA (BAC), Morgan Stanley (MS) traded higher on earnings and Germany's DAX helped pace an advance across the Eurozone with a 2 percent rally. At the end of the day, the news flow offered enough fodder for the bulls and the grind higher continues. The Dow Jones Industrial Average finished the day up 45 points and the tech-heavy NASDAQ gained 18.5 points.

Bullish Trends

Bank of America (BAC) was one of 20 Dow stocks moving higher Thursday. Shares hit a morning high of $7.29 and their best levels since late-October after the bank's fourth quarter earnings beat Street estimates. However, the morning gains were pared in afternoon action and BAC finished the day up 16 cents to $6.96. Trading in the options on the bank was brisk. Total volume was roughly 476,000 calls and 390,000 puts. The top trade of the day was a 50,000-contract block of January 2013 $5 puts at 55 cents per contract. An investor sold the massive block. Another 25,000-block also traded at 55 cents. At the end of the day, volume in January 2013 $5 puts on BAC was 88,000 contracts. Some investors might have sold the puts to open new positions on the heels of the earnings report. This strategist is possibly a willing buyer of the stock for $5 per share, or 28.1 percent below current levels, through January 2013. Writing 50,000 contracts would obligate the put seller to buy 5 million shares. Therefore, a fund manager or other institutional investor probably initiated the trade. It's also possible that the put selling was closing trades. To find out, check the open interest in the contract tomorrow. As it stands now, the Jan2013 $5 put on BAC has 332,975 in existing open interest.

Bullish trading was also seen in Transocean Offshore (RIG), Progressive (PGR), and Hartford (HIG).

Bearish Trends

GM added 31 cents to $24.82 and has now rallied for a 22.4 percent gain so far in 2012. Trading in the options on the automaker today included about 23,000 calls and 20,000 puts. The top trades were part of a straddle strategy, in which the investor sold about 9,000 April 24 puts on the stock at $1.44 and sold 9,000 April 24 calls at $2.06. The Apr 24 straddle, for a $3.50 net credit, is not necessarily a bearish play, but seems to be a view that shares will hold in a range around current levels in the months ahead. The best payoff from a short straddle happens if shares settle at the strike price of the options at the expiration. In this case, both the puts and the calls will expire worthless if GM settles at $24 at the April expiration, which represents a 3.3 percent decline during the next three months. If the options expire worthless, the straddle writer pockets the credit.

Bearish trading was also seen in Safeway (SWY), Aetna (AET), and JC Penney (JCP).

Market Summary

Stock market averages held modest gains with help from economic news and diminishing fears about the Eurozone Tuesday. Overseas, data showed Chinese economic growth sputtered at its slowest pace in more than two years, which seems to have fueled hopes that officials will soon begin to loosen monetary policy to spur growth in the Chinese economy. Hong Kong's Hang Seng stock index surged 3.2 percent Tuesday. On the domestic economic front, the NY Empire State Index rose to 13.5 in January, from 8.2 the month before. Economists were looking for the gauge of regional manufacturing activity to improve to 10.0. The earnings news was mixed, however. While Wells Fargo (WFC) edged up .7 percent after reporting a 20 percent jump in quarterly profits, Citi (C) shares slumped 8.2 percent after its results fell short of expectations. Meanwhile, the euro is rallying, gaining .6 percent to 1.273 on the buck, following a successful auction of Spanish debt. On Wall Street, the Dow Jones Industrial Average was up triple digits through midday, but pared the gains in the second half of trading. At the bell, the Dow was up 60 points. The NASDAQ gained 17.4 points.

Bullish Trends

Chesapeake (CHK) fell to new 52-week lows today and finished down 60 cents to $20.81 after natural gas prices slumped to new 2-year lows. Weakness in the commodity has been weighing on shares of the natural gas producer and CHK is now down 35 percent during the past five months. A noteworthy options trade in the stock seems to reflect expectations for a rebound through 2012, however, after one investor bought 35,000 January 2013 $35 calls on CHK for 58 cents per contract and sold 35,000 January 2013 45 calls at 23 cents. The Jan13 35 – 45 call spread on Chesapeake, for a 35-cent net debit, is a high risk-reward play. The entire debit is at risk if the position is held through the Jan 2013 expiration and shares hold below $35 (68%). The spread will widen to $10 if shares rally to $45 or more during that time, or a gain of 116.2 percent. At that point, the profit is equal to the spread, minus the debit, minus any transaction costs. The breakeven (excluding transaction costs) at expiration is at $35.35, or 68.2 percent above current levels.

Bullish trading was also seen in Range Resources (RRC), Barrick Gold (ABX), and Sears Holdings (SHLD).

Bearish Trends

Bearish trades surfaced in Cree Research (CREE) ahead of earnings. After gaining 43 cents to $23.33 in the regular session, shares are down 5.7 percent to $22 in the after hours after the company reported earnings and revenues that fell short of Street estimates. Trading in the options on the stock was brisk ahead of the results. 34,000 puts and 22,000 calls traded in CREE Tuesday. Top trades included a February 20 – 18 put spread, apparently bought for 99 cents, 5900X, and a February 20 – 17 put spread for 44 cents, 1200X. Some investors might have been buying out of the month put spreads on CREE on concerns about a possible post-earnings drop in the stock price because shares fell 12.5 percent on 10/19 after earnings were last reported.

Bearish trading was also seen in AK Steel (AKS), Carnival Cruise (CCL), and Royal Caribbean (RCL).