Sentiment
Stock market averages are up sharply and led by the financials Friday. JPMorgan (NYSE:JPM) jumped 5.9 percent and is the best gainer in the Dow Jones Industrial Average after the bank reported a solid quarterly profit on better-than-expected revenues despite the “London Whale†trading debacle. Wells Fargo (NYSE:WFC) is also rallying on earnings news. Meanwhile, stocks were broadly higher across Europe, led by a 1.9 percent rally in Germany’s DAX. Worldwide equity markets were steady after data showed China’s economy growing at a 7.6 percent pace in the most recent quarter. The number was better than expected, but not strong enough to take further monetary easing off the table.
In the commodities market, crude oil prices ticked up $1.14 to $87.22, and gold gained $26 to $1591 an ounce. On Wall Street, the Dow Jones Industrial Average is up nearly 200 points and not far from session highs. The NASDAQ gained 44 points. CBOE Volatility Index (.VIX) is off 1.30 to 17.03. Trading in the options market was busy this morning, but has slowed heading into the summer weekend. 6.1 million calls and 5.5 million puts traded across the exchanges so far.
Bullish Flow
Bank of America (NYSE:BAC) is up 26 cents to $7.74 and the second best gainer among 29 Dow stocks trading higher (only HPQ is in the red) late Friday. Trading is active and approaching 120 million BAC shares after both JPMorgan and Wells Fargo rallied around earnings news Friday. BofA reports on the morning of July 18. Trading in the options on the bank is active and reflects the bullish underlying tone ahead of the news. 198,000 calls and 50,000 puts traded on the bank so far. July 8 calls, which are 3.5 percent OTM and expiring just a few days after BofA reports earnings, are the most actives. 57,000 traded. January 10 and August 8 calls are the next most actives. The top trade is in the Jan 2014s, however, as a 15,000-lot of Jan14 $10 calls traded on BAC on the 92-cent bid and is possibly part of an over-write on the bank. Meanwhile, implied vols in the options on the stock eased 3.5 percent to 44, as investors breathe a bit easier following the rally in the financials today.
