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Upside Calls Active At Credit Suisse

 

Today’s tickers: CS, HUN & MS

CS - Credit Suisse Group – Trading traffic in Credit Suisse options this morning suggests some traders are positioning for shares in the name to rally in the near term. The stock kicked off the final trading session of the week in rally-mode, helped higher by an upgrade to ‘overweight’ from ‘equalweight’ at Morgan Stanley. But, shares have since surrendered gains, trading flat at $28.16 as of 11:00 a.m. ET. The most active contracts on CS this morning are the Feb. $28 strike in-the-money call options, with roughly 5,000 lots in play versus open interest of 885 contracts. Traders shelled out an average premium of $1.11 per contract to buy the $28 strike calls, and may profit at expiration next month should shares in the financial services provider rally 3.4% to exceed the effective breakeven price of $29.11. Credit Suisse is scheduled to report fourth-quarter earnings on Thursday, February 7th, prior to the opening bell.

HUN - Huntsman Corp. – A big print in Huntsman Corp. put options pushed the maker of chemical products onto our ‘hot by options volume’ market scanner in the early going on Friday. Shares in HUN are currently down 0.70% on the day to stand at $17.57 as of 11:15 a.m. in New York trading. The single-largest transaction in options on Huntsman appears to be disaster insurance on the name, or protection against a sharp adverse move in the price of the underlying through May expiration. It looks like one strategist purchased roughly 18,000 puts at the May $12 strike for a premium of $0.20 apiece. The contracts make money at May expiration if shares in Huntsman Corp. plunge 33% from the current price of $17.57 to settle below the effective breakeven point at $11.80. Shares in Huntsman, up nearly 50% during the past six months, last traded below $11.80 in July 2012. The chemical company is scheduled to report fourth-quarter earnings in mid-February.

MS - Morgan Stanley – Shares in Morgan Stanley are soaring today, rising as much as 8.25% to an intraday and new 52-week high of $22.46, after the financial services firm posted stronger-than-expected fourth-quarter earnings ahead of the opening bell this morning. The better-than-expected earning report and subsequent reaction in the price of the underlying sparked active trading in out-of-the-money call options on MS this morning. Traders positioning for shares in the name to extend gains in the near term snapped up more than 3,600 calls at the Jan. 25 ’13 $22.5 strike for an average premium of $0.15 apiece. Buyers of the $22.5 strike weekly calls stand ready to profit at expiration next week should MS shares settle above the average breakeven price of $22.65. Bullish trading spread to the February expiry calls, with fresh interest building in several out-of-the-money striking prices. Call buying at the Feb. $23, $24 and $25 strikes indicates a number of traders are positioning for further upside in shares of Morgan Stanley. The overall call-to-put ratio on the stock is currently above 1.6, while volume in excess of 133,000 contracts stands well above the stock’s average daily level of around 86,400 contracts, as of 11:45 a.m. ET.

 

Caitlin Duffy
Equity Options Analyst


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