Stocks finish…….mixed. Read More.

Etrade Financial (ETFC) is down 12 cents to $1.42 and 100,000 Jan2010 calls at the $1 strike trade today. They were sold for 50 cents, according to a floor contact. It is possibly closing, but not likely. Existing open interest is 135K contracts, but a large chunk of that interest appears to be the result of outright selling on June 26, when two blocks of more than 47K traded for 40 and 45 cents. Recall that yesterday, 50K Jan2011 $2.5 calls were being sold for 40 cents. Open interest in those calls increased by 52K.

In SHORT, Etrade Financial has seen two days of heavy call selling (chart) and this seems somewhat bearish for the online broker. Recall that Citadel owns a large percentage of Etrade and they might be selling calls against shares to bring in premium. Nevertheless, if the $1 calls are sold for 50 cents, they are capturing only 5 cents of time value (if ETFC is at $1.45) and this doesn’t appear to be a very attractive premium selling opportunity. Instead, it seems like a bearish bet and the view that the upside for Etrade shares during the rest of 2009 is very limited.

SLM Corp. (SLM) is down 35 cents to $8.80 and 9,350 calls traded, compared to 3,650 puts. Recent trades include a block of 3,795 Sep 10 calls for 45 cents on the ISE, an opening customer buyer, according to sentiment data. More than 5,200 traded–98 percent hitting ask-side. Another player bought 1000 Aug 9 calls outright for 47.5 cents, according to a contact on the floor. More than 2,000 now traded. The bullish flow comes the week after SLM reported earnings.

*Scanning all single-stocks subject to 2500 contracts minimum call or put volume

Follow-up to yesterday’s MYL story: From AP, “Mylan said FDA investigators found that claims in a lengthy investigative piece by the Pittsburgh Post-Gazette were unfounded. The agency, though, said that was not the case &. “The investigation is ongoing and the agency has formed no conclusions at this time. Statements to the contrary are untrue,” said Steven Solomon, the agency’s assistant commissioner for compliance policy. He said the investigation involves “allegations of compliance violations that the FDA takes very seriously.” Link to article.

click to enlarge chart.

*Scanning all single-stocks subject to 2500 contracts minimum call or put volume

Hewlett-Packard (HPQ) saw sweep of sale of 10k of the November $37.50 calls at the $5.60 bid. Prior open interest of 24,250 is sufficient to cover and this may be partial liquidation of a trade that was made just last week when 15,000 contracts were added to the OI. The stock has moved up some 25% over the past two months but seems to be into resistance at $42 level. The company does not report earnings until August 18 and IV levels are new 52 week lows of 32%.

Cigna (CI) is heading higher and calls are active amid relative strength in the health insurance names Tuesday. The sector is stronger after AP reported that a bipartisan group in the Senate held secretive talks and is working on a health care compromise that omits a public insurance option that the Obama adminstration favors. This might be viewed as a positive for CI, AET, CVH and private health plan providers. CI is up $2 to $28.44 and 17K options traded. Call volume accounts for 90%. Implied vols edging down to 47.5, from about 50.5. Earnings due out Thursday (before market).