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Hot Stock News for Options Traders

Dow Jones Industrial Average Poised to Snap Weekly Win Streak

May options expiration could create some erratic price movement today

by 5/16/2014 8:20:01 AM
Stocks quoted in this article:

Bears are refusing to back down, with futures on the Dow Jones Industrial Average (INDEXDJX:DJI) lower on the heels of two consecutive triple-digit drops for the 30-stock index. This is setting up to be the first week this month that the blue-chip barometer logs a weekly loss. Retailers will remain in focus today following Wal-Mart Stores, Inc.'s (NYSE:WMT) dismal earnings report on Thursday, with J.C. Penney Company, Inc. (NYSE:JCP) positioned more than 18% higher in the wake of its first-quarter beat. Elsewhere, homebuilders should garner some attention, with housing starts and building permits on the day's economic docket.

Meanwhile, "Today is options expiration, so an unwinding of option positions may create erratic price action," said Schaeffer's Senior Options Strategist Tony Venosa, CMT. "Additionally, the SPDR S&P 500 ETF Trust (SPY) has huge peak put open interest at the 186 strike. This will be an important level to keep an eye on for the session."

Plus, our Trading Topic of the Week -- 5 Ways to Interpret Short Interest: Look at option activity. Speculative action can offer an interesting context for short interest, adding a further dimension to your overall sentiment analysis.

And now, on to the numbers...

Dow Jones Industrial Average, S&P and Nasdaq futures

Futures on the Dow Jones Industrial Average (INDEXDJX:.DJI) are nearly 11 points below breakeven.

Market Statistics

The Chicago Board Options Exchange (CBOE) saw 1,075,564 call contracts traded on Thursday, compared to 741,764 put contracts. The resultant single-session put/call ratio fell to 0.69, while the 21-day moving average moved higher to 0.63.

NYSE and Nasdaq summary

Volatility indices

From the Trading Floor

"Downside momentum picked up on Thursday, as most of the broader indexes experienced immediate selling right at the open," noted Venosa. "By day's end, the S&P 500 Index (SPX) was off nearly 1%. The networking index closed in positive territory, thanks to a solid earnings report from tech giant Cisco Systems, Inc. (NASDAQ:CSCO). However, retailers were a drag, as WMT dropped nearly 2.5% on a disappointing earnings report."

Currencies and Commodities

  • The U.S. dollar index is flirting with a 0.1% lead ahead of the bell to linger near 80.05.
  • Elsewhere, crude oil is poised to resume its trek north, with the commodity up 0.1% at $101.21 per barrel.
  • Gold, meanwhile, is sitting just above the flat line, with the malleable metal 0.04% higher at last check to trade at $1,294.10 an ounce.
Currencies and commodities

Earnings and Economic Data

The week's economic calendar closes out with housing starts and building permits, as well as the preliminary Thomson Reuters/University of Michigan consumer sentiment survey for May. There are no earnings reports of note slated for today.

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