Deal-Making Drives Dow Jones Industrial Average Higher

Why Big VIX Moves are Unreliable Indicators

Nov 2, 2015 at 11:52 AM
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The Dow Jones Industrial Average (DJIA) dipped in the first minutes of trading -- weighed down by Visa Inc (NYSE:V) -- but quickly bounced back with a vengeance. A flood of M&A headlines are helping the major market indexes extend October's upward momentum, with traders encouraged by the strength of the collective corporate pocketbook. Against this backdrop -- and with healthcare leading the charge -- the Dow and its peers are comfortably higher, shrugging off a two-year low in the Institute for Supply Management's (ISM) manufacturing index.

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Among the stocks with notable option activity is Endurance International Group Holdings Inc (NASDAQ:EIGI), which is down 21.1% at $10.55, and just off an all-time low of $10.29. Traders are panning the company's lackluster revenue guidance, as well as its bid for online marketing concern Constant Contact Inc (NASDAQ:CTCT). At last check, EIGI puts are trading at 43 times the average intraday pace, and have outnumbered calls by a margin of nearly 10-to-1.

One of the Nasdaq's top performers is biotech Dyax Corp. (NASDAQ:DYAX), which is up 30.8% at $35.99, and just tagged a near 14-year high of $36.68. Bolstering the stock is a $37.30-per-share buyout bid from Shire PLC (ADR) (NASDAQ:SHPG).

Among the leading losers on the Nasdaq is real estate operator Green Brick Partners Inc (NASDAQ:GRBK), which has plummeted 22% to $8.23, after the David Einhorn-led company cut its 2015 forecast. Furthermore, Credit Suisse trimmed its price target to $10 from $13. The stock is on pace for its worst session in nearly two years, and is poised to settle in single-digit territory for the first time since mid-June. 

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The
CBOE Volatility Index (VIX) is down 0.5 point, or 3.4%, at 14.56.

Today's put/call volume ratio on the SPDR S&P 500 ETF Trust (SPY) is 1.33, with puts having the edge over calls. At last check, SPY was 1.5 points, or 0.7%, higher at $209.40.


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