Wednesday’s total option volume of 15.1 million contracts resulted in net open interest growth of 2.26 million calls and 2.90 million puts. Facebook Inc (FB), Microsoft Corp (MSFT), Micron Technology Inc (MU) and Advanced Micro Devices Inc (AMD) saw the greatest growth. Top five new positions opened include 64k Microsoft Corp (MSFT) Oct-13 30 calls, 32k Micron Technology Inc (MU) Oct-13 12 calls, 20k T Mobile US (TMUS) Nov-13 14 (nonstd TMUS1) calls, 20k Facebook Inc (FB) Sep-13 35 calls and 20k Facebook Inc (FB) Sep-13 30 calls.
Newfield Exploration (NFX) has been in a down trend for the past year. Yesterday, there was a buyer of 7,000 Jan 2015 27 calls opening. The stock is currently trading at about $21.71.
In China Lodging Group (HTHT), there was a buyer of 2700 May 15 calls. This was 68x open interest in the line. HTHT has been in a down trend since reaching a peak in February and appears to have broken support to the downside at $15.
Seasonally, we have arrived at the “sell in May, go away” point of the year. The S&P 500 shows a double-top pattern. The Dow and the Russell 2000 are showing lower highs. Our indicator remains bullish in the mid 50% range. The percent of stocks trading above their 10-day moving average is 47% which relieves a short-term overbought situation. We continue to use market weakness to increase exposure knowing that our stop-loss is tight with the indicator near 50%.