Some less actively traded names seeing bullish order flow: EZCorp (EZPW), Investment Technology Group (ITG), Renasola (SOL). Bearish order flow: Veeco Instruments (VECO), Sonic Corp. (SONC), THS (tied on 56d). Post Earnings Activity: Ciena (CIEN), Lululemon Athletica (LULU), Gildan Activewear (GIL), Anologic (ALOG). Pre-Earnings Activity: National Semi (NSM). Ex-Div Activity: Merck (MRK), Huntsman (HUN), NYSE Euronext (NYX), BCE, Ares Capital (ARCC), Public Storage (PSA), New Market (NEU), Leggett & Platt (LEG), Patterson Energy (PTEN).

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

Fuel Systems (FSYS) is down $5.92 to $44.97 and options volume is running 3X the normal levels. Looks like buyers of Dec 45 puts are looking for additional downside, but with no news to explain the sell off in shares or the interest in FSYS puts. Implied vols (average)are moving up to the mid 60s, up about 16 percent.

update (13:40). Weakness is due reports Italy will not extend its incentives for natural gas usage. FSYS gets 70 percent of its revs from the country. According to a Bloomberg report, “Italian Industry Minister Claudio Scajola may present a decree in January that makes 550 mln euros ($810 mln) available to renew incentives for the purchase of fuel-efficient cars and appliances, la Repubblica newspaper reported without citing anyone. While most of the money made available in the legislation will end up funding the purchase of new cars, incentives will also be given to companies that purchase more efficient machine tools, Repubblica said.”

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

Eli Lilly (LLY) is down $1.37 to $35.19 and implied volatility is higher after the company provided earnings guidance in its latest Investment Community Update, this morning at 8:30 eastern time. 2009 EPS is expected to be in the $4.30 to $4.40 and below the $4.42 average analyst estimate. Shares are down and 30K puts traded so far, which is 35X the typical volume for mid-morning 4X the number of calls. While the top two trades of the day (4500 April 32.5 puts at $1.21 on ISE and 3229 Jan 33 puts at 40 cents on ISE) look like premium sellers, looks like some investors are looking for additional downside in Dec 35 and Jan 36 puts. Implied vols up 6.6 percent to 27.5.

Psychiatric Solutions (PSYS) is down $2.06 to $19.67 and puts are active after the Chicago Tribune published a negative story about Streamwood Behavioral Health Center, which is owned by PSYS. It notes, “One of Illinois’ largest psychiatric hospitals dosed foster children with dangerous combinations of mood-altering drugs, sometimes using the medicines as ‘chemical restraints’ to control youth who needed counseling,” citing a report by the University of Illinois at Chicago’s department of psychiatry — link to story. PSYS is taking a hit and 3800 puts traded so far, or about 13X the recent average daily volume. Buyers of Dec 20 and Jan 17.5s are leading the flow. Implied vols (average) up to 60.5, from about 50.5 late yesterday.

Alliance Data (ADS) shares crept 1.7% higher Wednesday and are eyeing a possible gap fill from current levels of $61.84 to near $67. Calls traded 2X average volume with a buyer of 2,000 January $65 calls at the $1.30 offer accounting for most of the days volume, and a buyer of the January $65/70 put back-spread for 300X600 contracts, which may also be a roll of 600 short puts to 300 short puts. Shares of the consulting and credit services firm trade 10X forward earnings and 25.5X cash flow with a substantial short float of 27%, 10.5 days to cover, which gives me some conviction that the gap may be filled the longer shares trade in this range. 70% of business comes from credit cards, consumer lending, so ADS is a mover on all consumer credit data. Michael Orkin has been shorting the stock since the $30 level and has been wrong the entire way up.

Stocks are indicated modestly higher Thursday, following gains in commodities and steady trading in Europe. Thirty minutes before the opening bell on Wall Street, index futures hint at modest early gains for both the Dow Jones Industrial Average and the NASDAQ.

Stock benchmarks are mostly higher in Europe before the start of trading in New York after the Bank of England left rates steady, at a record low of .5 percent. The Swiss central bank did the same.

UK’s FTSE is up .8 percent. France’s CAC 40 and Germany’s DAX both gained more than 1 percent.

Higher commodity prices helped as well. Crude oil gained 33 cents to $71 a barrel and gold added $9.10 to $1130 an ounce after the euro edged up .0017 to 1.473 against the buck. The dollar added .24 to 88.12 against the Japanese yen.

In economic news, the latest weekly jobless claims showed an increase of 17,000 to 474,000 in the period ended December 5. Economists were looking for a decline of about 2,000. However, continuing claims fell to 5157K, down from 5460K and much better than the 5450K average economist forecast.


Bonds are seeing modest losses on the mixed data. The benchmark ten-year Treasury is down 3/32nd and yields 3.446 percent.


Among the stocks to watch, a number of Eureopan banks — RBS, CS, BCS, ING — are trading higher after Eurogroup asserted that Greece will avert bankruptcy. Apple Computer (AAPL) is edging higher on reports China Unicom has already sold 100,000 iPhones since the recent launch in China. Massey Energy (MEE) is up after JP Morgan upgraded the stock to Overweight. However, Steel Dynamics (STLD) and Ciena (CIEN) are trading lower on disappointing earnings news.