The bullish sentiment underlying this market since optimism spread over fiscal cliff worries towards the end of November was fully exposed today on equity prices across all sectors. We are now reaching back into territory previously lost during the buying euphoria experienced after QE3 was announced early September. Late in the afternoon, well after Boehner commented on the discussions over the fiscal cliff, the indexes pushed down considerably and the Financials gave back a lot of their gains. This gave the impression that the top was in for this recent bull move and prompted traders to pile in on the short side. The SPY couldn’t consistently make fresh lows and sellers stopped holding down the move so the indexes made a surprise move right back up from whence they came.
For options traders, today was a good day to scalp in and out of big large-cap stocks that were trending throughout the session. Goldman Sachs (GS) & Google (GOOG) were two names that paid out a significant amount on the weekly calls. The $120 weekly call expiring this Friday, December 14th traded just under 8K contracts. Ironically, 3200 of those were traded by Sang Lucci himself.
Once the stock held over $118 it was time to start buying up the $120 Weekly Calls and continue buying as the stock pushed towards $120. Once the market topped out for the morning and went into consolidation you can see this stock did as well. It made a shakeout attempt to get people turned off on the $120 strike and then proceeded to rocket back over $119 and make fresh highs on the day.
The buy was right around $.50 on this $120 weekly call and there was room for two trades which is what many of us did here at Sanglucci.com. Periods of consolidation always bring an options value down so taking profits is always a smart thing to do. Once the second move began, there was plenty of time to pick up your options under $.95 and sell around $1.10.
Google (GOOG) put in a move to $700 today and the volume in the $700 Weekly Call expiring Dec. 14th saw some increased activity with 7200 contracts swapping hands. The option also had a wide range from $1.20 all the way up to $6.40 leaving plenty of room to scalp in and out for profits. Once the stock broke and held $693, the trade was on.
Molycorp continues to experience higher than usual volume. After the close it was announced that the CEO is leaving. The stock responded by plunging more than 4%. The weekly call volume was very high today as well as the trading volume in the equity itself. Expect a lot more options volume when the stock opens up for trading tomorrow. Stick with Lucci!