Silver Options Busy on Slow Day

Your daily options trading wrap up.

Sentiment

Stocks are trading mixed in slow trading Monday. The latest New Home Sales report failed to stir much excitement. It showed improvement to 300,000 in March, from 270,000 the month before. Economists were looking for 280,000. Record highs in gold and a 3% rally in silver are getting some attention. The Dow Jones Industrial Average is down 25 points, but the tech-heavy NASDAQ gained 5. The CBOE Volatility Index (CBOE: VIX) added 1.04 to 15.73. Trading in the options market is light, with 6.1 million calls and 4.4 million puts traded so far.

Bullish Flow

IShares Silver Fund (NYSE: SLV) adds 61 cents to $46.15 after silver jumped another 3.5% to $47.75 an ounce Monday. Meanwhile, options volume in the silver fund is one million contracts through midday. Volume in the Weekly, expiring April 29, puts and calls is 168,000, or16.8% the total SLV options activity. 448,000 contracts have traded in the May puts and calls, or 44.85% the total volume. May calls with strikes ranging from 39 to 60 are seeing active trading, as short-term speculators turn to SLV options as a vehicle for playing the recent surge in the white metal. Meanwhile, the SLV May 37 Puts are the most actives after more than 46,000 contracts changed hands.

13,000 calls and 2,900 puts traded in SanDisk (NASDAQ:SNDK) in the first 10 minutes of Monday�s session. The company reported earnings after the closing bell Thursday. Shares dipped on the news late-Thursday after the company beat on earnings and revenues for the first quarter, but offered in-line revenue guidance for the second quarter. Yet, shares have rebounded Monday morning and are up 96 cents to $49.95. SNDK May 52.5 and 55 Calls, which saw interest ahead of the results, are the most active. Some investors might be closing out positions, as both contracts remain out-of-the-money and implied volatility is easing 12% to 36. May 44, May 50 and June 48 calls are seeing interest as well.

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Bearish Flow

IShares Emerging Markets Fund (NYSE: EEM) loses 41 cents to $49.77 and an investor sells 22,000 of the EEM May 51 — 53 Call Spread at 42 cents and then 22,000 more at 41 cents. Another 22,000 also traded at 41 cents. Looks closing for a second day. The same spread traded 40,000 contracts at 48 cents Thursday.

Implied Volatility Mover

Netflix (NASDAQ: NFLX) hit a new 52-week high today, but is now little changed heading into earnings. NFLX is down 82 cents to $251.40. While the stock is little changed, some investors appear to be bracing for volatility around earnings in the Weekly contracts. Most of the action has been in smaller lots. The top trade is a 228-lot of Weekly (Apr 29) 250 calls on the $12 bid, 3,480 contracts now traded. The Apr 29 Weekly puts are the most actives with 4,558 changed hands. 55,000 of the Weeklys on Netflix have now traded, which is about 42% of the total options volume, which is 62,000 calls and 67,000 puts traded in the name so far. Implied volatility is up 4% to 57.

Option Flow

Bullish flow detected in Ryland Group (NYSE: RYL), with 2700 calls trading, or 17 times its recent average daily call volume.

Bullish flow detected in Safeway (NYSE: SWY), with 5409 calls trading, or four times its recent average daily call volume.

Bullish flow detected in Xerox (NYSE: XRX), with 11,038 calls trading, or three times its recent average daily call volume.

Increasing volume is also being seen in Ford Motor (NYSE: F), TEVA Pharmaceutical (NASDAQ: TEVA), and Barrick Gold (NYSE: ABX).

Frederic Ruffy is the Senior Options Strategist at Whatstrading.com, a site dedicated to helping traders make sense of the complex and fragmented nature of listed options trading.