Where the Action is: Financial Sector Focus in Today’s Options Market

The NASDAQ , S&P 500 and Dow Jones are all struggling to maintain the anemic rally that has ensued for the past 1.5 weeks. Volume continues to dissipate in most major indices, SPY’s 14 day volume simple moving average has been on a downtrend since early-mid February.

Today’s options action has been focused, but not limited to, the financials, namely Bank of America (BAC), Citigroup (C), American International Group (AIG) and Financial Select Sector SPDR (XLF).

There is bullish call buying and put selling in BAC as well as call buyers in C, ahead of their 2 billion dollar trust preferred stock offering. AIG stock is extremely hard to borrow, and, on today’s rally, is generating heavy options activity. Traders who have a rough time shorting stock may consider using options to synthetically short the stock, if they desire to do so, although this comes at a price sometimes, as puts will likely be elevated in price.

Remember, there are a couple hours left in the trading day and the volume of these issues may continue to rise, but this is where we have already observed some heavy options activity today:

MSFT: $28.95 up $0.1500 or 0.52% volume: 23.66 million shares
Jan11 35.00 Calls: volume over 38989, versus Open Interest of 77689
Apr10 29.00 Calls: volume over 13802, versus Open Interest of 95028

BAC: $17.21 up $0.4100 or 2.44% volume: 140.84 million shares
Mar10 17.00 Calls: volume over 38690, versus Open Interest of 169867
Mar10 16.00 Puts: volume over 32104, versus Open Interest of 163423

AIG: $35.46 up $2.6900 or 8.21% volume: 50.12 million shares
Mar10 40.00 Calls: volume over 27321, versus Open Interest of 15988
Mar10 45.00 Calls: volume over 21344, versus Open Interest of 5680

ZION: $20.33 up $1.0700 or 5.56% volume: 8.87 million shares
Apr10 17.00 Puts: volume over 25418, versus Open Interest of 26352
Apr10 19.00 Puts: volume over 10974, versus Open Interest of 4794

AAPL: $224.70 up $1.6800 or 0.75% volume: 10.73 million shares,
Mar10 230.00 Calls: volume over 19595, versus Open Interest of 26386
Mar10 220.00 Puts: volume over 19346, versus Open Interest of 13756

XOM: $67.00 up $0.2150 or 0.32% volume: 13.80 million shares
Apr10 70.00 Calls: volume over 19572, versus Open Interest of 56065

MS: $29.76 up $0.7100 or 2.44% volume: 16.57 million shares
Mar10 30.00 Calls: volume over 17770, versus Open Interest of 28538

RIMM: $74.96 up $1.4100 or 1.92% volume: 9.04 million shares
Mar10 75.00 Calls: volume over 16323, versus Open Interest of 45709

GE: $16.50 up $0.0050 or 0.03% volume: 40.43 million shares
Mar10 17.50 Calls: volume over 15494, versus Open Interest of 148738

STI: $26.51 up $0.6800 or 2.63% volume: 8.30 million shares
Apr10 22.00 Puts: volume over 15360, versus Open Interest of 16713

These are my team’s observations. If you have observations to share, please add your voice in the comments.

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