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Upside Call Buyers Enjoy Gains As Shares In Ciena Corp. Rise

Options brief will resume April 12, 2013.

Today’s tickers: CIEN, TITN & KKR

CIEN - Ciena Corp. – Shares in networking products and services provider, Ciena Corp., jumped 8.0% on Wednesday morning to and intraday high of $16.81, rising in sympathy with ADTRAN after that company reported better-than-expected first-quarter earnings and revenue after the closing bell on Tuesday. Some options traders are benefitting handsomely from the pop in Ciena’s shares today, having purchased upside calls on the stock yesterday. The largest increase in call open interest on CIEN since the prior session was in the April $16 strike calls. Time and sales data indicates some 5,000 of the $16 calls were purchased yesterday for an average premium of $0.21 apiece. The sharp rally in the price of the underlying today has more than tripled the value of the $16 calls overnight, with the contracts currently changing hands at $0.72 each as of midday in New York. Meanwhile, traders initiating bullish bets on Ciena Corp. today looked to the April $18 strike, buying up around 3,000 call options for an average premium of $0.09 per contract. Buyers of the $18 calls stand ready to profit at expiration should shares in the name rally another 8.0% to top the average breakeven point at $18.09 by expiration next week. Bulls also snapped up more than 1,200 calls at the May $18 strike this morning at an average premium of $0.35 each.

TITN - Titan Machinery, Inc. – Bearish options purchased on Titan Machinery yesterday ahead of the backhoe manufacturer’s fourth-quarter earnings report are generating sizable overnight paper profits for some traders today, with shares in the name plunging to the lowest level since November of 2012. TITN shares are currently down 16% on the session at $21.95 as of 12:15 p.m. ET. It looks traders picked up around 1,600 puts at the April $25 strike on Tuesday, the nearest to-the-money strike price available with shares in Titan Machinery closing the session at around $26.14. Put buyers paid $0.90 in premium per contract yesterday to position for shares in Titan to potentially pull back. The double-digit percentage declines in TITN’s shares today now finds premium on the $25 strike puts has roughly tripled to $3.30 as of the time of this writing.

KKR - KKR & Co. L.P. – Put selling on global investment firm, KKR & Co., indicates one options player expects shares in the name to hold up through the company’s first-quarter earnings report at the end of April and during the next five weeks to May expiration. Shares in KKR are up nearly 4.0% today at a new 52-week high of $20.37, on the heels of an 85% increase since May of last year. The single-largest print in KKR options during the first half of the trading day was in the May $19 strike puts. It looks like one trader sold 4,567 of the $19 puts for a premium of $0.45 per contract. The put seller keeps the full amount of premium as long as shares trade above $19.00 and the options expire worthless at expiration next month.

 

Caitlin Duffy
Equity Options Analyst


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