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Sang Lucci

Sang Lucci has been successfully trading options for over six years. He began his career at a proprietary trading firm where he studied the techniques of other traders while managing his own account...

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Sang Lucci December 17th Market Wrap Up

Fiscal cliff or not, investors are pricing in that the crisis will be solved and the economy will be just fine. We're right back to the same area we saw last week where the broad indexes sold off from around 1,440 on the S&P 500. The Financials really led the way in today's trading session with the major Financial institutions all approaching their 52-week highs. The options volume across this sector has been predominantly heavy on the calls. The ETF's which track healthy performance in the Financial sector that you might want to look out for are the XLF & the FAS. The open interest on the December Monthly calls keeps rising with the $16 Call taking the lead at almost 192K contracts.

 

If you're talking specific stocks within the Financial sector, you'll find the most options volume in Bank of America (BAC), with the $11 December Monthly call trading over 105,000 contracts today alone. Ironically enough, the stock is gapping higher afterhours a solid $.20 off the backs of an upgrade from Meredith Whitney. People are trading the January Monthly call options very heavily as well with around a half a million open contracts in the $10, $12.5, and $15 calls. The gap up in all of these options due to the action afterhours will surely bring a smile to those long these contracts.

 

Google (GOOG) put in an excellent move into territory lost from its earnings pre-announcement debacle that took place on October 18th. The December 22nd $720 calls got the most action today off this 20 point move higher trading about 7500 contracts. That's impressive volume for one day on this name.

 

The play of the day though goes to Citigroup (C) putting in a plus 4% day for the stock and offering up some serious percentage gains in the weekly options throughout the day. Most stocks got weak during the afternoon session up until about 3 PM when everything shot back to their highs. Citigroup kept pushing the whole day and you could feel the bullishness despite short-term moves down on the indexes.

 

 

The stock gapped up close to the highs of its recent range during the past 7 trading sessions around $37.80. Once the stock opened it was off to the races just like Goldman Sachs and the rest of the pack. The option to play was the $38.50 Call expiring this Friday or even the $38 Call if you wanted to play it a bit safer. Let's take a look at the $38.

The reason why we're showcasing the Citigroup options today is because of the sheer size a trader could have gotten off in the trade. This option traded just under 14K contracts and it was a slow trickle up all day without that many nasty pullbacks to shake you out of the trade as one might usually find. Goldman Sachs & JP Morgan had some pretty nasty pullbacks which shook many call holders out before both rocketed back higher into the close.

 

With the Bank of America & Citigroup upgrades from Meredith Whitney we are expecting to see a decent gap up in many of the Financials off the open so congrats to all those who held a few calls overnight!

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted in: Options Markets Trading Ideas