Facebook_logo-300x166Wednesday’s total option volume of 14.7 million contracts resulted in net open interest growth of 2.64 million calls and 2.29 million puts.  Pfizer Inc (PFE), Noble Energy Inc (NBL), Facebook Inc (FB) and Bank of America Corporation (BAC) saw the greatest growth. Top five new positions opened include 64k Pfizer Inc (PFE) Jul-13 35 calls, 59k Pfizer Inc (PFE) Jul-13 35 puts, 30k Noble Energy Inc (NBL) Jan-14 65 calls, 25k Ford Motor Company (F) Sep-13 16 calls and 22k Smithfield Foods (SFD) Jan-14 30 calls.

During the 2007-2009 credit crisis, Pilgrims Pride Corp (PPC) filed for bankruptcy protection because it was unable to access short-term borrowing facilities.  The stock has risen from pennies to over $12 per share since the end of 2009.  Yesterday, there was an in-the-money buyer of 10,000 Sep 10 calls.  Given the stock is over $12 currently, this appears to be a high conviction bullish investment.   The volume traded was 17x normal.  Merger and acquisition activity in the sector has picked-up recently.

The Delta Market Sentiment Indicator weakened slightly this past week but remains bullish.  High relative strength stocks have been weaker than the broader market this past week which suggests that the volatility we have seen lately is being driven by traders looking to take profits on a short-term basis.  Fundamentally, the bull trend remains in place.

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