Apollo Group Calls In Play As Shares Rally

Today’s tickers: APOL, DELL & ORCL

APOL – Apollo Group, Inc. – Shares in for-profit education provider, Apollo Group, are up the most in the S&P 500 Index today after the operator of the University of Phoenix posted better-than-expected second-quarter earnings and sales prior to the opening bell this morning. Apollo shares increased as much as 15% during the first half of the trading session to touch an intraday high of $19.63, the highest level since mid-February. Trading traffic in APOL calls suggest some traders are positioning for the price of the underlying to continue higher in the near term. Weekly call volume is greatest at the Mar. 28 ’13 $20 strike, where upwards of 1,300 contracts changed hands against open interest of 103 lots. It looks like most of the volume was purchased at an average premium of $0.15 apiece, thus positioning call buyers to profit should Apollo’s shares rally another 9.5% over the current price of $18.41 to settle above $20.15 by the end of the shortened trading week. Bullish traders also picked up around 600 calls at the April $20 strike for an average premium of $0.40 each. Shares in Apollo are off their highs of the session, trading up 8.0% at $18.41 as of 11:50 a.m. ET, but are down roughly 60% since this time last year.

DELL – Dell, Inc. – Weekly puts on PC maker, Dell, changed hands on Monday morning amid a 3.0% rally in the price of the stock to $14.56 on news that Blackstone Group LP and Carl Icahn submitted proposals to purchase the company. Put buyers may be locking in gains on the stock’s more than 40% run since the start of the year, or positioning for shares in Dell to falter during the next few trading sessions. The most actively traded weekly options on Dell are the Mar. 28 ’13 $14.5 strike puts, with volume topping 3,500 lots versus open interest of 610 contracts by midday in New York. It looks like most of the put options were purchased in the early going for an average premium of $0.10 each. Put buyers may profit at expiration this week if Dell’s shares slip 1.1% from the current price of $14.56 to trade below the breakeven point at $14.40. Overall options volume on the stock is greater than usual, with more than 80,500 contracts in play on Dell at midday versus average daily options volume of around 64,000 contracts.

ORCL – Oracle Corp. – Shares in Oracle, which fell more than 10% last week following the company’s third-quarter earnings report, are continuing to selloff today, down 1.95% at $31.36 as of 12:10 p.m. ET. Options traders positioning for shares in the name to extend losses in the near term snapped up weekly puts on the stock this morning. Of the available weekly put options on Oracle, the Mar. 28 ’13 $31 and $31.5 strike contracts are seeing the most volume, with upwards of 1,500 lots in play at each strike so far today. Traders appear to have purchased most of the $31 strike puts at an average premium of $0.08 apiece, and the $31.5 strike puts at an average premium of $0.18 each. Put buyers may profit at expiration this week in the event that Oracle’s shares settle below average breakeven prices of $31.32 and $30.92, respectively.