Final Trading Hours of 2010 12-31-2010

Cusick's Corner
The key today is do no damage. It's been an incredible month and the market is very quiet, so try not to over analyze the data and headlines today. Also don't interpret any market pullbacks (most likely due to some tax selling) as the beginning of the end or the time to really load up. Consider taking the opportunity to trim losers and look to potentially add some protection, i.e. puts, to your winners as we head into the last hours of trading in 2010. See you After Hours.

Major averages are modestly lower, with end-of-year position squaring driving some of the action, but not much volume or volatility seen on the last day of trading in 2010. There have been no economic releases or earnings to guide the action. Consequently, the Dow Jones Industrial Average has traded in a 46-point range and is up four points. The NASDAQ lost 9.50. The CBOE Volatility Index (.VIX) edged up .41 to 17.93. Options volume is very light, as many investors are already away for the New Year holiday. 2 million calls and 1.8 million puts traded through 11:00 ET.

Bullish
IMAX is seeing relative strength and increasing call activity. Shares are up $3.88 to $30.74 after the UK Daily Mail published a report indicating that Sony might be interested in the Canadian-based movie chain. It's unsubstantiated, but IMAX touched a new 52-week high and options volume is running 18X the average daily. 25,000 calls and 6,240 puts traded in the name, led by increasing action in January 30, 32.5 and 35 calls. These contacts expire in three weeks and some investors appear to be taking new positions on hopes for some sort of announcement in the near-term.

Abbott Labs (ABT) adds 51 cents to $48.08 after an article on Seeking Alpha highlighted the stock in an article titled “Ten Stocks Expected to Grow Their Dividends in 2011.” Shares are up and options volume includes 7,100 calls and 2,725 puts. January 48 calls are the most actives, with more than 4,000 traded.

Bearish
The top options trade today is in Citi (C). Shares are down one penny to $4.75 and one investor bought a block of 50,000 January 4.5 puts at 6 cents per contract. Since open interest is more than 250,000 contracts, the activity might be closing. If opening, it might be to hedge shares in early 2011 or make an outright bearish bet against the bank. Monday's open interest update will probably indicate whether the put purchase is opening or closing.

Put volume is picking up in Eaton Corp. (ETN), a Cleveland-based electrical equipment company. Shares are up 76 cents to $101.92 and total options volume is 3X the average daily, with 3,090 puts and only 125 calls traded in the name. Most of the action is in the February 100 and 105 calls, which have traded 1068 and 1317X, respectively. Nearly all traded at the ask and so it appears that some investors are buying puts and bracing for possible weakness in ETN between now and mid-February.

Unusual Volume Movers
Rare Element (REE) options volume is running 2X the usual, with 35,000 contracts traded and call volume accounting for 66 percent of the activity, according to data from website WhatsTrading.com.

SPDR Metals and Mining ETF (XME) options activity is running 2X the usual, with 26,000 contracts traded and put volume representing 88 percent of the volume.

Verigy (VRGY) options volume is 3X the typical levels, with 18,000 contracts traded and call volume accounting for 100 percent of the activity.

Increasing volume is also being seen in Synovus (SNV), Toll Brothers (TOL), and Waste Management (WM).

Implied Volatility Movers
Rare Element (REE) is giving back some recent gains, but implied volatility remains elevated amid heavy trading in the options market. REE was up nearly 65 percent on the week heading into today's trading session after China cut quotas on rare earth minerals Tuesday. Shares are down 45 cents to $16.29 today and options volume includes 23,000 calls and 12,000 puts. Implied volatility is up another 2 percent to 115 and now up 57.5 percent from a week ago.