Put Player Bets Against VIVUS, Inc.

Sarah Wasserman (swasserman@sir-inc.com)

Biopharmaceutical issue VIVUS, Inc. (VVUS) has seen a surge in put volume today, with roughly 5,500 of these bearishly oriented options crossing the tape -- triple the stock's expected single-session put volume.

Upon closer inspection, it appears that one option player is responsible for the bulk of today's put volume. Early this morning, 3,000 February 8 puts changed hands at the ask price, suggesting that they were likely purchased. With just 2,000 contracts currently open at this strike, it appears that new positions are being added here today. By buying to open VVUS' February 8 put, this option player is expecting the stock to backpedal beneath the $8 level over the next two months.

By and large, traders maintain a skeptical outlook on VVUS. The equity's Schaeffer's put/call open interest ratio (SOIR) of 0.69 ranks in the 92nd annual percentile, revealing that short-term option players have been more bearishly aligned just 8% of the time during the past 12 months.

Elsewhere, short interest on VVUS surged by nearly 14% during the most recent reporting period, and now accounts for 20.1% of the equity's total available float.

From a technical perspective, the pessimism levied toward VVUS is a bit surprising. The stock rallied in December on news that an FDA panel had recommended approval for Contrave, Orexigen Therapeutics' (OREX) new diet drug. Since then, VVUS has been hovering in the $9 to $10 neighborhood. During this time, the stock's 10-day moving average has moved in to meet up with the shares, and could provide a springboard to launch VVUS on the next leg of its uptrend.

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Transocean Rallies Despite Critical Investigative Report

Sarah Wasserman (swasserman@sir-inc.com)

Oil stocks were in the hot seat on Wednesday, after a White House panel found that BP plc (BP), Transocean Ltd. (RIG), and Halliburton Co. (HAL) made a series of risky, cost-cutting moves that ultimately contributed to last year's oil spill in the Gulf of Mexico last year. The report concluded that, "Whether purposeful or not, many of the decisions that BP, Halliburton, and Transocean made that increased the risk of the Macondo blowout clearly saved those companies significant time."

Interestingly enough, RIG has actually added over 1% today, as investors believe that the finger-pointing report might actually save the company from a costly gross negligence charge.

Option players were all over RIG on Wednesday, with 57,000 contracts crossing the tape -- triple the equity's expected daily option volume.

RIG's January 75 call was a popular choice on Wednesday, with nearly 4,800 contracts traded -- the bulk of which changed hands at the bid price, indicating they were likely sold. Open interest increased by 1,060 contracts overnight, confirming that fresh positions were added at this strike. By selling to open the January 75 call, option players are betting on RIG to remain below the $75 level over the next few weeks.

Technically speaking, RIG has not closed a week above $75 since April 23. The stock is currently trading right at $74.

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Call Volume Revs Up as General Motors Hits New High

Sarah Wasserman (swasserman@sir-inc.com)

General Motors Company (GM) has been on a roll the past few weeks. Since its November IPO, the stock had been idling in a trading range between the $33.50 to $33.50 levels; however, last week, GM staged a rally. In fact, on Thursday the auto issue hit a new high of $36.98.

The automaker caught option players' attention on Thursday, with roughly 73,000 contracts crossing the tape on the session -- nearly double GM's expected daily option volume. Calls were especially hot, with some 57,000 of these bullishly oriented options changing hands.

GM's January 2011 35 call was a popular choice on Thursday, with nearly 5,500 contracts changing hands -- 84% of which traded at the bid price, suggesting that they were likely sold. Open interest at this strike fell substantially overnight, confirming that a portion of these calls were likely liquidated. With GM hovering just shy of the $37 level, these 35-strike calls are comfortably in the money.

In fact, call players are likely cheering GM's recent rally, as the 35 strike is home to peak front-month call open interest of 47,416 contracts. Meanwhile, peak put open interest of just over 13,700 contracts can be found at GM's 32 strike -- which is deeply out of the money.

GM closed at $36.82 on Thursday.

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