Options News
Wednesday, May 5th, 2010

Dow Chart

Dow Chemical (DOW)

Dow Chemical Co. (DOW) was inundated by options traders on Tuesday, as more than 79,100 contracts were executed. This surge in volume was nearly four times the stock's average daily trading volume, with 57% of the volume that changed hands was on the put side.

Prior to Tuesday's options action, traders had shown a preference for the stock's calls. The International Securities Exchange (ISE) reports nearly two calls purchased to open for every one put purchased to open during the past fortnight. This ratio of calls to puts is higher than 65% of all those taken during the past 12 months, pointing to a rising optimism. On the other hand, Wall Street still has its doubts about the firm. According to Zacks, the stock has earned five "buy" ratings, six "holds," and two "sells."

The shares of DOW have gained more than 6% since the beginning of the year but analysts are mixed on its ratings.

NVDA Chart


NVIDIA Corp. (NVDA) is engaged in visual computing technologies and the inventor of the graphic processing unit. Its products are designed to generate realistic, interactive graphics on consumer and professional computing devices.

NVIDIA Corp. had a jump in options trading today, as more than 78,000 contracts were bought, three times the daily volume, 77% of the volume were call options. This optimism was brought about by the Semiconductor Industry Association, on Tuesday announcing that worldwide semiconductor sales in March rose 4.6% from February, to $23.1 billion, driven by strong demand in the computing and communications markets. They said that PC unit sales are projected to grow in the mid-to-high teens, and handset growth is expected to be in the high single-digit range. Computing and communications account for more than 60% of total demand for microchips.

First-quarter sales were $69.2 billion, compared with $43.7 billion for the first quarter of 2009, which marked the low point in semiconductor sales during the global economic recession.

However, analysts are quite skeptical about NVIDIA as the majority is giving the stock a “hold’ rating. It has been a rough 2010 for the shares, as NVDA has dropped more than 21% since the beginning of the year.

PBR Chart

Petroleo Brasileiro (PBR)

Petroleo Brasileiro (PBR), through its subsidiaries is engaged in the exploration and production of oil and oil products, natural gas and other fluid hydrocarbons.

Options players were active towards Petroleo Brasileiro (PBR), as more than 66,000 contracts changed hands. This growth in volume was more than double the stock's average daily trading volume of 32,388 contracts, with 66% of the volume as call contracts.

UBS downgraded Brazilian state-run oil company Petroleo Brasileiro SA (PBR) to "neutral" from "buy" on Tuesday, which obviously attributed to this surge in options play. Analysts attributed the rating change to higher company spending as the firm "develops the local supply chain and invests in non-core areas," according to a note. They also cited uncertainty related to recent statements from the company's chief financial officer on the valuation of oil.

The shares of PBR are struggling, as the equity has dropped more than 18% since the beginning of 2010. The equity has been pressured lower by resistance at its 10-week and 20-week moving averages since December 2009.

Ford Motor Company (F)

Ford Motor Company (F) reported on Monday that its April sales were up 25%. April marks the fifth straight month that F sales have increased by more than 20%, according to Reuters. Ford Motor Company was inundated by option traders today, pushing volume to 321,000 contracts traded, which is double F's usual volume of roughly 126,000 contracts. Puts have seen the sharpest spike today, with 122,000 of these bearish bets changing hands -- almost four times F's usual put volume of 34,000 contracts.

In fact, in the past two weeks, F has pulled back to the long-term support of its 10-week and 20-week moving averages, which have driven F higher since March 2009. F is currently locked between these trendlines, of the $12 and $13 levels.

Ford Chart

NutriSystem Inc. (NTRI)

NutriSystem Inc. (NTRI) is a provider of a weight management system based on a low-calorie, portion-controlled, prepared meal program.

The company reported its first-quarter figures after the close on Monday, boasting profits of 15 cents per share, compared to analysts' predictions for profits of 12 cents per share. The weight-loss guru also posted a strong forecast for its second quarter, resulting in a 12% spike in the stock.

Option traders were quick buy on Tuesday, with 25,000 contracts being traded -- nearly five times the stock's usual volume of fewer than 5,200 contracts. Calls comprised the bulk of this volume, with some 19,000 of these bullish bets changing hands.

After presenting a weak 2010 outlook in early March, the stock gapped lower, from the $20 level to around $16. In the weeks since, NTRI has trended steadily upward back to the $19-to-$20 area. However, after posting strong first-quarter numbers on Monday night, the stock climbed higher, and is currently trading at $22.84.

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