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

State Street shares are off 25c to $43 and have tumbled some 15% since the Oct. 19 earnings report. Today option volume is 2x the daily average with notable transaction being the sale of 5,000 of the December $50 calls at the 50c bid price. The same strategist also bought 3000 Nov 45 calls at $1.025 and sold 3000 Dec 40 puts at $1.575. All against a position in 61.2K shares at $42.90. This appears to be a short-term bullish trade, but not in anticipation of a move above $50 by Dec expiration.

E*Trade Financial (ETFC) is lower after the online broker reported a third quarter loss of a nickel per share, which was a penny better than analyst estimates. Revenues totaled $575 million, down from $602 million in the second quarter. Some investors were probably looking for better news, as shares are under pressure and a flurry of Nov 2 calls were sold in morning action.

The top trade hit midday, however, after an investor traded 18,795 Nov 1.5 calls for 15 cents against a position in 902K shares at $1.48. It might be part of a buy-write strategy, where 15 cents was collected to lower the cost basis to $1.33. If so, it leaves upside to $1.5 or 12.8 percent through the November expiration (23 days).

CBOE Volatility Index (.VIX) is up 1.25 to 26.08 and has staged an impressive four-day 5.39 point (26 percent) rally. VIX is at its best levels since Oct 6, as the S&P 500 falls for the sixth time in seven days. Risk aversion is certainly higher and defensive trading is being seen in the options market Total volume is running 170 percent the expected for the first two hours, with 3.75 million puts and 3.40 million calls traded. The total put-to-call ratio is 1.10, compared to a 22-day average of .79. QQQQ Dec 40 puts are the day’s most actives, with 86.8K traded. SPY Nov 105 puts and the RUT nov 490 – 500 put spread are among the most actives as well.

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

Rovi Corp, shares of the Santa Clara, CA digital entertainment firm are down 20c to $27.60 and option volume is 4x the daily averge. Driving the action was a the sale of 2,500 of the Dec. $25 puts at 65c and the purchase of 2,400 of the Dec. $30 betweenn the 90c-95c asking price. No prior open interest so this risk/reversal is likely new bullish position.

BofA (BAC) is down 20 cents to $15.25 and has now suffered a ten-day 18 percent slide. One player seems to view the decline as an opportunity. At about 15:00 yesterday, they bought the Nov 16 – 17.5 call spread at 34 cents, 120000X! The spread was bought (bought the 16s for 49 cents while selling the 17.5s at 15 cents) and created new open interest in both contracts. It was an opening trade.


This bullish vertical spread is a short-term bet because November options expire three weeks from Friday, or in 23 days. It is bullish because it requires a move beyond $16.34, or 7.15 percent, to breakeven. The maximum profit (excluding commissions) is $1.16 if shares rally to $17.50 (14.4 percent) or more by the November expiration. Therefore, the strategist is risking 34 cents to make $1.16, a ratio of more than three-to-one.

Stocks are indicated modestly lower following another round of mixed earnings news Wednesday. Thirty minutes before the opening bell on Wall Street, stock index futures hint at modest early losses for both the Dow and the NASDAQ.

The S&P 500 Index (.VIX) is down five times in the past six days and the CBOE Volatility Index (.VIX) has posted a three-day 20 percent rally, as risk aversion is on the rise. It will probably take some decidedly good news to lift the equity market out of the bearish funk.

That hasn’t happened yet Wednesday. Software giant SAP is down 7.25 percent after reporting third quarter earnings that missed Street estimates and also cutting its full year sales forecast.

Arcelor Mittal Steel (MT) lost 1.6 percent after posting earnings that topped analyst estimates, but revenues fell short of expectations. ConocoPhilips (COP) shares are little changed, even after the oil company reported earnings that exceeded analyst estimates. Sandisk (SNDK) is down 2.5 percent after Goldman downgraded the stock to Neutral from Buy. However, Visa (V) is seeing modest gains after the credit card company reported better-than-expected earnings and revenues.

In economic news, a report on durable goods showed some improvement. According to the Commerce Department, orders for long lasting goods increased by 1 percent last month, which follows a 2.6 percent drop the month before. However, stock index futures didn’t react to the news, as the number was in-line with economist expectations.

New home sales numbers are due out at 10:00 a.m. eastern time. Economists expect the report to show improvement to an annualized rate of 440,000 homes in September, up from 429,000 the month before.

Bonds are little changed ahead of the news. The benchmark ten-year Treasury sits unchanged in early pit trading and now yields 3.443 percent.

The dollar fell .63 to 91.14 against the Japanese yen. The euro lost .0018 to 1.4791 against the buck.

Crude oil is down 55 cents to $79 a barrel ahead of weekly inventory data due out at 10:30. Gold egged up .6 to $1036 an ounce.