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Oct
7
Stock market averages moved higher in a relatively quiet session Thursday. The underlying tone of trading remained positive for a third day after Euro zone equity markets rallied around news ECB officials agreed to offer more loans to troubled European banks. UK’s FTSE paced the advance with a 3.7 percent surge. In the US, the domestic economic calendar included one sole stat, which showed jobless claims increasing by 6,000 to 401K last week and in-line with expectations.
Overall market action now has a wait and see feel heading into key monthly jobs data Friday morning. Economists expect to see the US economy adding 83K new jobs in September and the unemployment rate holding steady at 9.1 percent. The Dow Jones Industrial Average is up 183 points ahead of the data and the tech-heavy NASDAQ added 46. CBOE Volatility Index (.VIX) edged down 1.56 to 36.25, which coincides with the 50-day moving average
SPDR Financials (XLF) adds 39 cents to $12.29 and the Oct 10 – 13 risk-reversal trades at 6 cents, 90411X, while the Nov 10 – 13 risk-reversal trades at 19 cents, 90411X. The four-way spread probably rolls a position opened one month ago. Shares are down about 3 percent since that time and the bullish combo is being rolled to November. Oct 13 calls on the fund have now traded 171,000 contracts and also includes a recent buyer of 10,000 at 14 cents, 12,500 for 13 cents, and 20,000 at 13 cents. Earlier, a 55,500 contract block of Dec 14 calls was bought on the financial ETF at 18 cents per contract. 450,000 calls and 295,000 puts traded on the fund Thursday, which is about double the usual. Implied volatility in XLF options is down 7 percent to 48.5 and now a far cry from the highs above 70 seen two months ago.
In bearish trade, EBAY adds 62 cents to $31.17 and is on a three-day 10.8 percent run higher. Some investors apparently see the strength as an opportunity to write April 35 calls on the stock. The top trade is a 4,453-contract block at $2.35 on ISE and an opening seller, according to data from the exchange. 18,321 now traded against 592 in open interest. A total of 30,000 calls and 5,900 puts traded on Ebay Thursday.
Ahead of the employment number, Monster Worldwide (MWW) moved higher and 4,065 Nov 8 calls traded on the online employment solutions company. The flow includes a multi-exchange sweep of 2,200 contracts at 75 cents when the market was 65 to 75 cents. 100 percent of the volume has traded at the ask and open interest is only 50 contracts. Sentiment data reflects at a firm buyer.
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