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Options Activity Suggests Tough Week For Halliburton, Clear Skies For JetBlue

Today’s tickers: HAL, JBLU, DELL & HL

HAL - Halliburton Co. – Shares in the Houston, Texas-based oilfield services provider dropped as much as 5.8% to $34.86 today on reports BP is accusing a unit of the Halliburton Co. of destroying evidence that could have shown the company is also at fault for the deadly explosion in the Gulf of Mexico last year. Options traders expecting the stock to remain under pressure this week placed short-term bearish bets on the stock. Weekly puts that expire at the end of the trading week attracted heavier-than-usual volume, with the Dec. ’09 $35 strike put trading more than 4,400 times against open interest of just 444 contracts. It looks like investor purchased the majority of the $35 strike weekly puts for an average premium of $0.53 each. In-the-money put buyers at this strike stand prepared to profit should the price of the underlying fall another 1.1% to breach the average breakeven point on the downside at $34.47 at expiration. Bears picked up put options at the lower Dec. ’09 $ 34 strike for an average premium of $0.31 each, as well. Approximately 2,700 puts have changed hands at the $34 strike as of 12:30 PM ET. Options implied volatility on Halliburton is up 5.7% at 50.55% in early-afternoon trade.

JBLU - JetBlue Airways Corp. – Investors initiating near-term bullish positions in JetBlue Airways this morning appear to have shown up relatively late to the party, however, late could be better than never as long as the price of the underlying stock continues to rise in the next couple of weeks. Shares in JetBlue Airways Corp. are up 1.7% today to stand at $4.78 as of 11:20 AM ET. The stock has rallied roughly 30.0% since AMR Corp. filed for bankruptcy on November 29. Some traders jumped into JBLU calls last week on the heels of the AMR Corp. news, purchasing most of the 4,915 total open positions at the Dec. $4.0 strike for an average premium of $0.17 apiece. The air-carrier’s ascent in the meantime has made the option to buy the stock at $4.00 at December expiration far more expensive, particularly now that the contracts are in-the-money. Less than one hour into today’s session, it appears one trader bought around 5,100 in-the-money calls at the Dec. $4.0 strike for an average premium of $0.70 a-pop. The calls are far more expensive than they were just a few short days ago, but the trader may turn a profit as long as shares in JetBlue Airways exceed the average breakeven price of $4.70 at expiration later in the month.

DELL - Dell, Inc. – The PC maker popped up on our scanners this morning due to bearish options activity in the front month. One investor may be positioning for Dell’s shares to continue to slip following the company’s announcement Monday that it will no longer sell its Streak tablet, which runs on the Android operating system and has been on the market since January, in the United States. Dell’s shares are down 0.50% to stand at $15.85 just before 11:45 AM in New York trade. The company’s SVP of the Enterprise Solutions Group is scheduled to address investors at the Barclays Capital Global Technology Conference in San Francisco, California, tomorrow. More than 5,900 in-the-money put options changed hands at the Dec. $16 strike against open interest of 2,283 contracts. It looks like one investor purchased the majority of the puts for an average premium of $0.45 apiece. Profits may be available on the position should shares in Dell decline 1.9% to breach the effective breakeven price of $15.55 at expiration.

HL - Hecla Mining Co. – Call options on the largest and lowest cost silver producer in the U.S. are flying off the shelves, with shares in the mining company trading 5.85% higher on the day at $6.33 as of 12:10 PM on the East Coast. Hecla Mining Co. calls are most active at the Jan. 2012 $6.0 strike, where more than 58,000 in-the-money contracts have changed hands against open interest of 7,027 positions. It appears most of the calls were purchased for an average premium of $0.63 per contract. The investor or investors responsible for the bulk of the buying activity may profit at expiration next month as long as shares in Hecla Mining top the average breakeven price of $6.63. Hecla Mining presented at the Wall Street Institutional Investor Conference in New York this morning. Shares in HL last traded above $6.63 back on November 15.

 

Caitlin Duffy

Equity Options Analyst


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