Oil Rally Lifts Dow Jones Industrial Average; Nasdaq Flops

Is It Time to Buy Blue-Chip Options?

Apr 8, 2016 at 12:13 PM
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The Dow Jones Industrial Average (DJIA) has lost some steam since its intraday peak, but remains comfortably higher at midday, as U.S. stocks respond to a rally in oil prices. May-dated crude futures are up 6.7% at $39.75 per barrel -- on pace for their best finish since March 23 -- as investors hold out hope for a production freeze. In addition, last night's comments from Fed Chair Janet Yellen lifted sentiment across Wall Street, along with dovish remarks from New York Fed President William Dudley. Meanwhile, the S&P 500 Index (SPX) has moved back into the black for the year, though the tech-rich Nasdaq Composite (COMP) has given up an early lead. 

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Among the names with unusual option volume LinkedIn Corp (NYSE:LNKD), as the stock continues to fall after another bearish note from Wall Street. With LNKD down 2.3% at $109.83, put options are crossing at twice the average intraday pace. The most popular strike is the weekly 4/8 110-strike put, and it looks like this option has attracted both eleventh-hour buyers and sellers. For those initiating long positions, they're hoping for LNKD to keep falling below $110 before today's close. 

One of the top performers on the New York Stock Exchange is mining stock Freeport-McMoRan Inc (NYSE:FCX). A pair of bullish analyst notes have the shares 6.7% higher at $9.44. However, FCX's 200-day moving average has come into play during recent weeks, and may be acting as resistance. 


Gap Inc (NYSE:GPS) is leading the losers on the Big Board, after the retail stock announced disappointing same-store sales for March. The shares have fallen 12.6% at $24.18, on pace for their lowest close since Feb. 12. 

CBOE Volatility Index (VIX) is down 0.8 point, or 5.1%. 

Today's put/call volume ratio on the SPDR S&P 500 ETF Trust (SPY) is 1.30, with puts outnumbering calls. The SPY is 1.2 points, or 0.6%, higher at $205.13. 

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