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EMC Bearish Puts In Focus; Monster, Green Mountain Upside Calls In Play

 

Today’s tickers: EMC, MWW & GMCR

EMC - EMC Corp. – Bearish positioning in EMC Corp. options is on the rise this morning as shares in the provider of enterprise storage systems, software and services move 5.5% lower to $23.85. EMC and other software providers are getting hit hard today after Informatica Corp. reported preliminary second-quarter earnings and revenue that missed estimates amid a challenging macroeconomic environment, particularly in Europe. A disappointing jobs number is also pressuring U.S. equities on the final trading session of the week. One strategist appears to have purchased disaster insurance on EMC Corp. within the first five minutes of the opening bell this morning. The Jan. 2013 $16 strike put changed hands more than 2,000 times against open interest of just 30 contracts and it looks like nearly all of the puts were purchased for an average premium of $0.29 apiece. The put options may increase in value over the second half of the year should shares in EMC continue to pull back. The price of the underlying is still positive for the year, up 8.8% year-to-date; however, the stock has come off sharply in recent months, down 20.5% from a 52-week high of $30.00 set at the end of March. The $16 puts are profitable at expiration next year in the event EMC’s shares tumble 34% from the current level to breach the average breakeven price of $15.71. This breakeven point is well below the stock’s 52-week low of $19.84, though well above the stock’s financial crisis low of $8.25. Near-term bearish action is also evident in the Aug. $23 puts where some 3,300 puts were picked up for an average premium of $0.70 apiece in the first half of the trading session. EMC Corp. reports its second-quarter results ahead of the open on July 24th.

MWW - Monster Worldwide, Inc. – Shares in online employment search and services provider, Monster Worldwide, are down 1.75% at $8.40 just before midday in New York following the June payrolls report that came in below forecasts. At least one options player appears to be taking advantage of the bearish price action in MWW today, picking up cheapened upside calls in the August expiry ahead of MWW’s July 26th second-quarter earnings report. Upwards of 4,250 call options have changed hands at the Aug. $10 strike thus far today versus previously existing open interest of 350 contracts. It looks like most of the calls were purchased early in the trading day for an average premium of $0.35 apiece. Call buyers make money if shares in Monster surge 23% to top the average breakeven price of $10.35 by expiration next month. Shares in MWW last traded above $10.35 at the end of March.

GMCR - Green Mountain Coffee Roasters, Inc. – The next five trading sessions could see shares in Green Mountain extend gains by the looks of trading traffic in the weekly call options set to expire July 13th. More than 2.5 calls are in play on the specialty coffee company for each single put option trading on the stock so far today, with shares in GMCR up 5.0% on the day to stand at $24.71 as of 12:05 p.m. in New York. Fresh bullish positioning in the July 13 ’12 $25 and $26 strikes caught our eye this morning, with around 500 calls purchased at each strike for average premiums of $0.63 and $0.26 apiece, respectively. Traders long the calls may profit at expiration if Green Mountain's shares rally above the breakeven points at $25.63 and $26.26 next week.

 

Caitlin Duffy

Equity Options Analyst


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  1. Hi Caitlin,
    Thanks for the options update.
    Can I ask you which website you use to get the option trades detail? Where do you see whether the options were purchased at ask or bid price?
    Thanks.