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Pandora Call Options Pop As Shares Improve


Today’s tickers: P, CBS & XCO

P - Pandora Media, Inc. – Traders that appear to be speculating on a rebound in shares of the provider of Internet radio services turned-up the volume in Pandora Media call options today. Shares in Pandora, which have been beaten down in recent months, increased as much as 10.5% to $8.91 in the first half of the session before losing some steam to stand up 4.9% on the day at $8.45 as of 1:15 p.m. ET. The stock is down 15.0% year-to-date and more than 65.0% since touching a peak value of $26.00 at the June 2011 IPO. June expiry call options saw the most action today, with the $9.0 strike call changing hands more than 6,700 times versus open interest of just 354 contracts. Most of the $9.0 calls appear to have been purchased for an average premium of $0.76 apiece. Call buyers profit at expiration as long as shares in Pandora jump 15.0% to surpass the average breakeven point at $9.76 by June expiration. Traders positioning for shares to extend gains also snapped up around 1,000 in-the-money calls at the June $8.0 strike for a premium of $1.10 a-pop. Pandora Media, Inc. is slated to release first-quarter earnings after the market closes on May 24th.

CBS - CBS Corp. – A burst of call buying on CBS Corp. caught our eye today, with shares in the name trading up 1.2% at $33.31 in early-afternoon trade. The bulk of the options volume in the mass media company appears to be betting on continued near-term appreciation in the price of the underlying shares, perhaps ahead of the Company's first quarter earnings release after the final bell on May 1st. The most active contracts in play on CBS Corp. today are the May $34 strike calls, where upwards of 4,400 lots changed hands against open interest of 929 positions. It looks like nearly all of the call options were purchased in the first 20 minutes of the trading day at a premium of $0.70 apiece. The bullish calls may be a profitable investment at expiration next month should shares in CBS Corp. rally another 4.2% to top the breakeven price – and new multi-year high – of $34.70. Shares in CBS are up nearly 20.0% year-to-date.

XCO - EXCO Resources, Inc. – Shares in the Dallas, Texas-based energy company are on the rise today, up 5.7% at $6.10 as of 12:15 p.m. in New York. The stock popped up on our 'hot by options volume' market scanner after large blocks of call options changed hands in the May expiry. Strong intraday gains in the shares have lifted the value of the bullish options substantially during the past few hours. Most of the options activity on XCO is centered in the May $6.0 call, where more than 14,000 contracts traded against open interest of 1,423 positions. It looks like the majority of the calls were purchased just after 10:00 a.m. this morning in two blocks, one 5,450-lot block, and the other 3,942 lots, both priced at $0.45 per contract. The calls are now in-the-money, but did not start the day there, with XCO shares hovering around $5.85 during the first 40 minutes of the session. The May $6.0 strike calls are now roughly 33.0% more expensive than they were earlier today and currently display an asking price of $0.60 each. The trader or traders responsible for purchasing the large blocks of calls stand ready to profit by expiration should shares in XCO rally another 5.7% to surpass the effective breakeven price of $6.45. EXCO Resources is scheduled to report first-quarter earnings after the close of trading on May 1st.

 

Caitlin Duffy

Equity Options Analyst


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