Today’s tickers: MGM, WFT, HD, OC, APC, TLB & RBCN
MGM – MGM Resorts International, Inc. – The casino resort operator’s shares rebounded 0.60% during afternoon trading to arrive at $10.11 by 1:50 pm (ET). MGM’s shares fell as much as 13.85% from Monday’s opening price of $11.56 to Tuesday’s intraday low of $9.96. Optimistic options investors expecting the casino operator’s shares to continue to rebound ahead of July expiration day purchased debit call spreads. Traders picked up approximately 5,000 calls at the July $11 strike for an average premium of $0.28 apiece, and sold about the same number of calls at the higher July $12 strike for an average premium of $0.08 each. Net premium paid for the spreads amounts to an average of $0.20 per contract. Investors positioning for a rally are positioned to make money if MGM’s shares jump 10.8% to trade above the average breakeven price of $11.20 by expiration next month. Shares of the underlying stock must surge 18.7% and exceed $12.00 in order for call spreader to walk away with maximum potential profits of $0.80 per contract by July expiration.
WFT – Weatherford International Ltd. – Shares of the provider of equipment and services used for the drilling, completion and production of oil and natural gas wells are up 1.35% to stand at $13.48 as of 2:05 pm (ET). WFT popped up on our ‘most active by options volume’ market scanner in afternoon trading due to bullish activity in the August contract. It looks like investor expecting Weatherford’s shares to continue to appreciate over the next couple of months are engaging in plain-vanilla call buying on the stock. Traders picked up roughly 4,200 in-the-money calls at the August $13 strike for an average premium of $1.48 apiece. Investors long the calls are prepared to profit should shares of the underlying stock rally another 7.4% over the current price to surpass the average breakeven point to the upside at $14.48 by August expiration. Bullish sentiment spread to the higher August $15 strike where investors paid an average premium of $0.56 per contract to take ownership of 3,400 call options. Optimistic individuals long the higher strike calls make money if WFT’s shares surge more than 15.4% to exceed the effective breakeven price of $15.56 by expiration day in August.
HD – Home Depot, Inc. – The home improvement supplies retailer attracted bearish options strategists throughout the trading session with shares of the underlying stock slipping into the red this afternoon to stand 0.30% lower on the day at $28.54 as of 2:45 pm (ET). It looks like some investors expecting shares to decline and remain depressed for the next couple of months sold approximately 10,000 calls outright at the August $28 strike for an average premium of $1.95 apiece. Investors selling the calls keep the premium received on the sale as long as Home Depot’s shares trade below $28.00 through expiration day in August. Another pessimistic player with a longer-term bearish view on the stock initiated what appears to be a large-volume credit spread in the November contract. The investor looks to have sold 10,300 calls at the November $37 strike for a premium of $0.14 apiece, and purchased the same number of calls at the higher November $40 strike for an average premium of $0.04 each. The trader pockets a net credit of $0.10 per contract on the trade and keeps the full amount if, by November expiration, shares of the underlying stock fail to rally above $37.00. The parameters of the spread dictate maximum potential losses of $2.90 per contract for the investor should shares jump 40.15% over the current price to exceed $40.00 by expiration day. Losses start to accumulate for the credit spreader if HD shares rally 30% to surpass the effective breakeven price of $37.10 ahead of expiration day in November.
OC – Owens Corning, Inc. – Shares of the global producer of glass fiber reinforcements and other materials slipped 2.40% lower to $30.67 this morning, inspiring one options strategist to initiate a three-legged bearish combination play. The investor sold call out-of-the-money call options in order to finance the purchase of a debit put spread in the August contract to prepare for continued erosion in the price of the underlying shares through expiration. The pessimistic player purchased 3,000 puts at the August $30 strike for a premium of $2.00 each, sold 3,000 puts at the lower August $25 strike for a premium of $0.55 apiece, and sold 3,000 calls at the August $32.5 strike for a premium of $1.60 a-pop. The investor responsible for the transaction pockets a net credit of $0.15 per contract, and keeps the full credit received as long as Owens Corning’s shares fail to rally above $32.50 through expiration day in August. Additional profits accumulate for the trader if OC shares decline another 2.2% to breach the effective breakeven price of $30.00. The investor walks away with maximum available profits, including the credit received today, of $5.15 per contract if the price of the underlying stock plummets 18.5% from the current price of $30.67 and trades below $25.00 by August expiration.
APC – Anadarko Petroleum Corp. – The implementation of a short strangle on Anadarko Petroleum Corp. today suggests one options investor is expecting shares of the underlying stock to remain range-bound through November expiration. Shares of the independent oil and gas exploration and production company fell as much as 5.00% to touch down at an intraday low of $34.84 this morning, but clawed their way back to stand just 0.70% lower on the day at $36.42 just before 11:30 am (ET). The strangle-strategist sold 5,000 puts at the November $27.5 strike for a premium of $3.41 apiece in combination with the sale of 5,000 calls at the higher November $40 strike for a premium of $5.01 each. Gross premium pocketed by the responsible party amounts to $8.42 per contract. The investor keeps the full premium received on the transaction as long as Anadarko’s shares trade within the boundaries of the strike prices described through expiration day in November. The short stance taken in both call and put options expose the investor to losses should shares of the oil company swing dramatically in either direction. Losses start to accumulate if APC’s shares rally above the upper breakeven price of $48.42, or if the price of the underlying slips beneath the lower breakeven point at $19.08, ahead of November expiration.
TLB – Talbots, Inc. – One optimistic options player purchased a plain-vanilla debit call spread on the retailer of women’s clothing, apparel, shoes and accessories in the first half of the trading session to prepare for the price of Talbots’ shares to appreciate ahead of August expiration. Shares of the underlying stock are currently up 2.1% at $10.25 as of 11:20 am (ET). The bullish investor picked up 3,504 calls at the August $11 strike for an average premium of $0.75 per contract, and sold the same number of calls at the higher August $12.5 strike for an average premium of $0.26 apiece. Average net premium paid to enact the spread amounts to $0.49 per contract. Thus, the TLB-bull stands ready to make money as long as the retailer’s shares rally another 12.1% to exceed the average breakeven price of $11.49 by August expiration day. Maximum potential profits of $1.01 per contract are available to the call-spreader if Talbots’ shares surge 21.95% over the current price of $10.25 to surpass $12.50 ahead of expiration.
RBCN – Rubicon Technology, Inc. – Bullish investors scooped up call options on the manufacturer of innovative crystalline products for LEDs and other specialty applications this morning with shares of the underlying stock rallying as much as 9.1% to an intraday high of $30.31. RBCN’s shares are currently up 7.90% to stand at 29.79 as of 11:15 am (ET). Options players expecting Rubicon’s shares to continue to climb higher ahead of next month’s expiration day purchased 2,000 now in-the-money calls at the July $30 strike for a premium of $0.80 per contract. Call buyers make money if shares of the provider of electronic materials increase another 3.4% over the current price to surpass the effective breakeven point to the upside at $30.80 by expiration day in July.