Options were balanced yesterday with 26% of the flow bearish, 25% bullish and 49% neutral. In the top five biggest trades, Yahoo! Inc (YHOO) Jan 15, 20 and 30 calls were active. These three trades were the top three open interest changes in the marketplace. Yahoo has rallied back to the area of its mid-April 2010 and mid-May 2011 tops, a resistance zone. Furthermore, the stock is now well above its 200-day average or extended to the upside, much as it was in early May 2011 and April 2010 prior to notable corrections. Volume increased on the September – November 2012 rally, a positive. After a near-term correction with support estimated below 17, a new advance is anticipated with the good prospect of an upside breakout above the 2010-2011 highs.
Topping the list of total volume to total open interest was Melco Crown Entertainment Limited (MPEL), the Macau-based casino company, where 42% of total open interest traded, 10 times normal volume. The stock was down with the group on a probe report of money laundering in Macau. Specifically, market participants bought to open 15K MPEL Jan 15 calls.
We have seen bullish flow in Sirius XM Radio (SIRI) over the past week. There have been two periods when this stock advanced well above its 200-day average or became extended to the upside (arrows). The first time was in mid-May 2011 and was followed by a near-term correction. I anticipate this current extended period will also include a near-term decline below recent levels. Near-term support is estimated to be in the area of its 200-day average now @2.33.
In Weyerhaeuser (WY), there was a buyer of about 9,000 Dec 27 puts. The stock appears to be forming a head-and-shoulders trading pattern with the stock currently rounding down off of the right shoulder. The company goes ex dividend today.