No Buyers Remorse Off the Lows

Cusick's Corner
The market has held its ground and AAPL has been solid post the passing of Steve Jobs. Support is holding and I am not fading this move unless there is a trade, being nimble is critical. I am focusing on the Bond market today and in spite of the strength they have been holding up -- this is a market that I really think is ready for a break, especially if we continue to see good data and the EU headlines stay positive. I will be monitoring TLT, the bond ETF, to see if the current grind higher is met with selling, at the 120-121 levels I will check to see if the selling accelerates. VIX is also pulling back and never broke the summer high, a potential signal that we may have put a decent support level this week. See you After Hours.

Stock market averages rallied along with European benchmarks Thursday and were also helped higher by a round of better-than-expected monthly same store sales results. Stocks rallied across the Eurozone after the ECB pledged more loans to help the battered banks across the continent. UK's FTSE led the advance with a 3.7 percent rally. Meanwhile, Target (TGT) and Nordstrom (JWN) are among the retailers trading higher on better-than-expected September sales results. The only economic stat of the day showed jobless claims up by 6,000 to 401K last week, which was in-line with expectations. Attention now shifts to monthly jobs data due out Friday morning. The Dow Jones Industrial Average is up 109 points ahead of the news. The tech-heavy NASDAQ gained 35 through midday. CBOE Volatility Index (.VIX) eased back 1.11 points to 36.70. Overall options volume is running about the recent daily average, with 4.8 million calls and 4.8 million puts traded across the exchanges through 12:30pm ET.

Bullish Flow
Las Vegas Sands (LVS) adds $1.40 to $41.48 and options on the casino operator are seeing brisk trading today amid strength in the sector after September gaming statistics were released. LVS, which Citi analysts maintained as a Buy rating today, closed at 2011 lows of $36.71 Monday, but has rebounded 13 percent since that time. Meanwhile, options volume on the stock so far is 35,000 calls and 16,000 puts. The Weekly call options at the 41 strike, which expire 10/7, are the most actives. 5,010 traded. Weekly 42, October 36, and October 40 calls are seeing increasing volume as well.

SPDR Gold Trust (GLD) adds 43 cents to $159.89 after the precious metal edged up $5.7 to $1646 an ounce. One player in the options market seems to expect the metal to shine through January 2012 and initiated a substantial three-way spread on the gold ETF Thursday. To be specific, 20,000 January 135 puts were sold on the gold fund at $2.78 to buy 20,000 January 175 - 185 call spreads at $2.30. 48 cents was collected on the package, which the strategist keeps if shares hold between $135 and $175 through the expiration and all the contracts expire worthless. Better profits are possible if the stock rallies beyond the $175 strike and the call spread widens to $10. There's additional risk to the downside, as the strategist is also selling naked puts. They might be a willing buyer of the ETF if it falls to $135 per share. GLD is a fund that represents ownership in the actual commodity.

Bearish Flow
The S&P 500 Index (.SPX) is up 5.3 percent over the past three days and has now rallied 7.6 percent from the 52-week lows seen intra-day Tuesday. Not all investors seem convinced the gains can hold. Puts on the SPDR 500 Trust (SPY) remain actively traded. Shares, which hold the same five hundred names as the S&P, are up $1.32 to $115.74 and options volume on the product through midday includes 1.52 million puts and 666K calls. The top trade (which is also the largest options block traded across the exchanges today) is 82,500 October 110 puts at $1.41 when the market was $1.39 to $1.41. Oct 110 puts on the SPYders are 5 percent out-of-the-money and expire in 15 days. An institutional investor might have initiated a massive premium purchase to hedge a stock portfolio in the days ahead. October is historically volatile period for the US equity market.

St. Jude Medical (STJ) loses 33 cents to $36.81 and options volume in the medical-device maker is 9X the daily average. 8,360 puts and 420 calls traded on the stock so far. The action is focused on January 42.5 puts, which are 15.5 percent in-the-money. Several blocks traded this morning at the $7 asking price. Volume in the contract is now 7,008 against 5,686 in open interest. Some investors might be buying in-the-money puts rather than shorting the stock as a bearish play on STJ. Shares have not performed well lately and are down 31.1 percent since April.

Unusual Volume
Alcoa (AA) options volume is running 3X the (22-day) average, with 125,000 contracts traded and call activity accounting for 85 percent of the volume.

Target (TGT) options volume is 2.5X the average daily, with 37,000 contracts traded and call volume representing 74 percent of the activity.

Monsanto (MON) options volume is running 2X the average daily, with 36,000 contracts traded and call volume representing 70 percent of the total volume.

Increasing options activity is also being seen in MBIA (MBI), McDermott (MDR), and Hartford (HIG).

Implied Volatility Mover
MBIA (MBI), the surety and title insurance company, is trading up 39 cents to $8.27 and options volume on the stock is running 4X the daily average. 16,000 calls and 2,900 puts traded in MBIA so far. Trading is brisk in October 9, November 11, October 11, October 8 and November 8 calls. Some players are apparently taking positions in MBI ahead of a decision in a court case between the company and Bank of America Countrywide. Implied volatility is up 1.5 percent to 105 and elevated ahead of the news.