VG – Vonage Holdings Corp – Options volume on communications services company Vonage is up sharply today, with over 1,100 contracts changing hands during morning trading versus average daily options volume of around 65 contracts, after the company agreed to acquire privately-held company Vocalocity, Inc. for $130 million in cash and stock. Shares in Vonage are soaring on the news, up as much as 23% to touch a new two-year high of $3.75 during the first half of the session.
Traders taking to Vonage options in the early going on Thursday appear to be buying upside calls on the stock. The most traded contracts so far today are the Oct $4.0 strike calls, with around 500 lots purchased at a premium of $0.05 each. Traders also appear to have purchased around 300 of the Nov $4.0 strike calls for a premium of $0.15 apiece. Buyers of the Nov $4.0 strike calls may profit at expiration next month if shares in VG rally another 11% to exceed the breakeven price of $4.15 each. Shares in Vonage last traded above $4.15 in July of 2011.
CTXS – Citrix Systems, Inc. – Shares in cloud computing company, Citrix Systems, dropped 13% on Thursday morning to as low as $58.00 after the company yesterday announced preliminary third-quarter results, lowering its revenue guidance to a range of $710 to $712 million from a previous estimate of $730 to $740 million, and reducing net income expectations to a range of $0.39 to $0.40 a share from previous guidance of $0.41 to $0.42 a share. The release of disappointing preliminary results and the subsequent sharp drop in the price of the underlying sparked heavier than usual trading in CTXS options today.
Overall options volume is currently above 8,000 contracts versus the stock’s average daily options volume of around 2,000 contracts, with slightly more calls changing hands as compared to put options. Some of the action in calls appears to be driven by strategists positioning for the price of the underlying to rebound in the near term. It looks like traders snapped up roughly 750 Oct $60 calls for an average premium of $0.71 each. Buyers of the $60 calls stand ready to profit at expiration next week in the event that Citrix Systems shares rally 3.0% over the current price of $58.90 to exceed the average breakeven point at $60.71. Traders also appear to have purchased roughly 250 of the Nov $65 strike calls in the early going for an average premium of $0.75 apiece.
Citrix is scheduled to report third-quarter earnings after the close of trading on October 23rd.
