Thursday’s total option volume of 17.1 million contracts resulted in net open interest growth of 2.67 million calls and 2.49 million puts. Microsoft Corp (MSFT), Barrick Gold Corporation (ABX), Zynga Inc (ZNGA) and Amazon com (AMZN) saw the greatest growth. Top five new positions opened include 29k Ford Motor Company (F) May-13 14 calls, 27k Zynga Inc (ZNGA) Jun-13 3 puts, 27k Fusion-io Inc (FIO) Sep-13 24 calls, 25k Microsoft Corp (MSFT) Jun-13 35 calls and 25k Microsoft Corp (MSFT) Jun-13 34 calls.
Over the years, we have had good success trading Alcatel Lucent (ALU). Yesterday, there was a buyer of 10,000 ALU Jan 2014 1.5 calls and 4,000 Jun 1.5 calls. This flow was 12x normal. The stock has pulled back from recent highs of about $1.80 and appears to have found support at $1.30. The company missed earnings expectations this morning but beat on revenues.
Our Market Sentiment Indicator (MSI) is exactly on the 50% mark this week. This measurement was taken on end of day prices on Wednesday. Thursday’s bullish market move has moved the MSI back into bullish territory. If the MSI begins to turn higher through Wednesday of next week, it should represent a good time to place new money to work in equities. When the indicator is so close to 50%, it provides a tight stop-loss in case the market turns down.