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Juniper Networks Calls Look For Shares To Rebound

JNPR – Juniper Networks, Inc. – Juniper Networks shares are in negative territory today, sliding in sympathy with Cisco Systems Inc., after the world’s largest maker of computer networking equipment reported lower than expected first-quarter sales and forecast an 8-10% decline in revenue in the current quarter from the year ago quarter. Juniper’s shares fell nearly 4.0% to $18.55 during morning trading, while shares in Cisco dropped as much as 13.5% to $20.77, the lowest level since May. Shares in JNPR have since rallied off session lows, but continue to trade down 2.2% on the day at $18.86 as of 11:15 a.m. EST.

Trades initiated in December expiry call options straight out of the gate this morning indicates at least one strategist is positioning for the price of Juniper’s shares to rebound somewhat by year end. More than 1,500 in-the-money calls traded at the Dec $18 strike within the first two minutes of the opening bell, with most of the contracts purchased at a premium of $1.15 each. The calls may be profitable at expiration next month if shares in Juniper Networks rally more than 1.5% over the current price of $18.86 to exceed the average breakeven point at $19.15.

The intraday rebound in JNPR shares since the start of trading this morning has lifted the asking price of the $18 strike calls, with premium on the contracts up approximately 15% since this morning at $1.33 each just before 11:30 a.m. EST. 

EGLE – Eagle Bulk Shipping, Inc. – Shares in Eagle Bulk Shipping fell to their lowest level since August 20th on Thursday morning, after the company reported a wider than expected third-quarter loss on lower than expected revenue yesterday. The stock dropped 33% to $3.13 in early trading and sparked heavier than usual trading in EGLE options.

Trading in the Mar ’14 expiry puts near the start of the trading session indicates one or more options traders are positioning for the price of the underlying to extend losses. Upwards of 2,300 of the Mar ’14 $3.0 strike puts have changed hands against open interest of 715 contracts so far today, and it looks like most of the volume was purchased for an average premium of $0.63 each. Put buyers stand ready to profit at expiration in the event that Eagle Bulk Shipping shares sink another 24% from today’s low of $3.13 to trade below the average breakeven point at $2.37. EGLE shares last traded below $2.37 in March. 


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