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Friday, April 12, 2024

Bears Descend on Genoptix as Shares Nosedive

Today’s tickers: GXDX, MRVL, QCOM, SMH, ORCL, FUQI & SMTS

GXDX – Genoptix, Inc. – Shares of the specialized laboratory service provider engaged in delivering personalized and comprehensive diagnostic services to community-based hematologists and oncologists plunged 25.79%, crashing straight through its now defunct 52-week low of $21.75, to reach a new low of $16.98 with just over 10 minutes remaining before the closing bell. The firm’s shares plummeted after the California-based company said it expects second-quarter net income of $0.30 per share, which disappointed analysts expecting an average of $0.40 a share. One bearish options investor took advantage of Genoptix’ hemorrhaging shares by initiating a credit call spread in the August contract. The trader appears to have sold 2,000 calls at the August $17.5 strike for a premium of $1.80 each, spread against the purchase of the same number of calls at the higher August $22.5 strike for a premium of $0.50 apiece. The investor pockets a net credit of $1.30 per contract, and keeps the full amount as long as shares of the underlying stock do not rally above $17.50 ahead of expiration day. The parameters of the transaction dictate maximum potential profits of $1.30 per contract, however, potential losses faced by the responsible party sum to a maximum of $3.70 per contract if GXDX shares rebound sharply and exceed $22.50 by August expiration. Losses start to accumulate for the investor if shares rally 10.6% from the current price of $16.98 to breach the effective breakeven price of $18.80 by expiration day in August.

MRVL – Marvell Technology Group Ltd. – Bullish and bearish options trading strategies were initiated on the semiconductor maker this afternoon with shares of the underlying stock up more than 1.6% at $19.25 as of 2:40 pm (ET). Optimists purchased call options in the June and July contracts to position for continued appreciation in Marvell’s share price. Investors picked up approximately 2,500 now in-the-money calls at the June $19 strike for an average premium of $0.34 apiece. Call buyers at this strike price are positioned to make money if MRVL shares rally above the average breakeven price of $19.34 by expiration on Friday. Buying interest spread to the higher July $20 strike where 1,100 call options were coveted at an average premium of $0.52 per contract. Investors long the calls profit only if shares of the underlying stock jump 6.6% to surpass the average breakeven price of $20.52 by July expiration. In contrast to the plain-vanilla call buying action, one cautious individual purchased a debit put spread, which yields maximum benefit to the responsible party if Marvell’s shares cool off ahead of expiration next month. The put player purchased 5,000 lots at the July $19 strike for a premium of $0.86 apiece, and sold the same number of puts at the lower July $18 strike for a premium of $0.46 each. The net cost of the spread amounts to $0.40 per contract. Thus, the trader is prepared to amass maximum potential profits of $0.60 per contract should shares of the semiconductor company decline 6.5% from the current price of $19.25 to trade at or below $18.00 by expiration day in July.

QCOM – Qualcomm, Inc. – The manufacturer of digital wireless telecommunications products realized a 1.25% decline in the value of its shares this afternoon to trade at $35.14 just after 2:50 pm (ET). Despite the pullback in the price of the underlying stock, one optimistic options investor appears to have enacted a bullish risk reversal in the October contract. It looks like the options strategist sold 14,000 puts at the October $30 strike for a premium of $1.01 apiece, and purchased the same number of calls at the higher October $40 strike for a premium of $0.66 each. The transaction yields a net credit of $0.35 per contract, for a total of $490,000.00, which the responsible party keeps in full as long as Qualcomm’s shares exceed $30.00 through October expiration. Additional profits are available in the event that QCOM shares surge more than 13.8% to trade above $40.00 ahead of expiration day.

SMH – Semiconductor HOLDRS Trust – Shares of the Semiconductor HOLDRS Trust, which issues depository receipts called Semiconductor HOLDRS that represent an undivided beneficial ownership in the U.S.-traded common stock of companies that develop, manufacture, and market semiconductors, fell 0.45% to touch down at an intraday low of $28.01 in morning trading. However, as the trading day progressed, shares of the fund clawed their way back up to rally 0.50% to $28.59 as of 11:35 am (ET). Bullish options strategists dominated trading activity observed on the fund thus far today. Investors expecting to see continued upward momentum in shares of the SMH purchased 1,200 calls at the July $29 strike for an average premium of $0.62 apiece. Call buyers at this strike price make money if the fund’s share price increases 3.60% to trade above the average breakeven point of $29.62. Meanwhile, other optimistic individuals picked up 1,300 calls at the higher July $30 strike for an average premium of $0.29 per contract. These higher-strike call coveters accumulate profits as long as shares of the Semiconductors HOLDRS Trust surge 5.95% over the current price of $28.59 to breach the effective breakeven point at $30.29 ahead of July expiration day.

ORCL – Oracle Corp. – The world’s second-largest software maker attracted call buying options investors in the first half of the trading session despite the 0.75% decline in the price of its shares to $23.03. Oracle’s shares are perhaps weaker on news the firm faces a lawsuit initiated by a whistleblower and the U.S. Justice Department alleging the software company overcharged the government by tens of millions of dollars. Options activity on the stock, however, was dominated by investors positioning for a rebound in Oracle’s share price by July expiration. It looks like optimists purchased some 5,000 calls at the July $24 strike for an average premium of $0.34 per contract. Call buyers at this strike price are poised to profit as long as ORCL shares rally 5.7% to exceed the average breakeven point to the upside at $24.34 by expiration day next month.

FUQI – Fuqi International, Inc. – Shares of the designer of high quality precious metal jewelry in China are up 5.25% to stand at $9.40 as of 11:15 am (ET) after earlier rallying as much as 10.75% to touch an intraday high of $9.89. The sharp increase in the price of FUQI shares inspired some optimistic options traders to pick up roughly 2,400 calls at the July $10 strike for an average premium of $0.65 per contract. Investors long the calls make money as long as Fuqi International’s shares increase 13.3% over the current price of $9.40 to surpass the average breakeven price of $10.65 by July expiration.

SMTS – Somanetics Corp. – News that medical equipment manufacturer, Covidien PLC, agreed to purchase Somanetics Corp. for $25.00 a share in cash sent Somanetics’ shares flying 31.5% higher this morning to an intraday and new 52-week high of $24.86. One bullish options trader opted to sell short 1,450 puts at the November $22.5 strike to pocket premium of $0.05 per contract. The investor keeps the full $0.05 premium received on the sale as long as Somanetics’ shares trade above $22.50 through November expiration.

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