Bulls Snap Up Tractor Supply Co. Call Options
by Option Review - July 5th, 2011 6:30 pm
Today’s tickers: TSCO, INFY, AOL & HBI
TSCO - Tractor Supply Co. – Bullish players paid Tractor Supply Co. options a visit at the start of the U.S. trading week with shares in the operator of retail farm and ranch stores increasing as much as 2.4% to a new all-time high of $69.45. Investors expecting shares in the specialty retailer to extend gains in the near term exchanged more than 1,400 calls at the July $70 strike against previously existing open interest of 265 contracts. It looks like most of the calls were purchased for an average premium of $0.77 apiece. Call buyers make money if shares in Tractor Supply rally another 1.9% over today’s high of $69.45 to surpass the average breakeven price of $70.77 by July expiration. Put options in the front month attracted some attention, as well. Investors betting shares in TSCO are likely to exceed $60.00 through expiration day sold 267 puts at the July $60 strike for an average premium of $0.09 each. Meanwhile, some 300 puts were purchased for an average premium of $0.40 up at the July $65 strike. The rise in demand for options on the stock helped lift options implied volatility on the stock 7.2% to 31.84% by 11:30 am ET. July contract call and put options expire ahead of Tractor Supply Co.’s second-quarter earnings report after the final bell on July 20.
INFY - Infosys Technologies Ltd. – Shares in Infosys have been in recovery-mode since touching down at a 6-month low of $60.30 two weeks prior. The stock gained 9.7% to trade as high as $66.14 this morning, but options activity on the stock today suggests one strategist is poised to benefit from a pull back in the price of the underlying. The provider of IT services and solutions is…
Blackboard Options Active
by Option Review - April 19th, 2011 4:14 pm
Today’s tickers: BBBB, CREE, HBI & FRX
BBBB - Blackboard, Inc. – Shares in the provider of enterprise software applications and services to the education industry jumped 34.8% to an intraday and new all-time high of $50.10 on news the company received unsolicited buyout offers. Blackboard has reportedly hired Barclays Capital as its financial advisor as it evaluates takeover bids. Buyers of May $40 strike call options on Monday saw premium on the then out-of-the-money contracts explode during the current session. It looks like investors paid an average premium of $0.40 apiece for roughly 1,200 calls at the May $40 strike yesterday afternoon. The huge run up in the price of the underlying shares, which were halted for a brief period earlier today, lifted the asking price on the calls up to $10.50 per contract as of 2:50pm in New York. Traders populating Blackboard options during the current session focused in on the May $50 strike calls. Approximately 2,500 calls changed hands at that strike today. Two-way trading traffic in the calls suggests that slightly more of the options were sold than purchased, for an average premium of $1.73 each. Blackboard is scheduled to report first-quarter earnings after the market closes on May 4, 2011.
CREE - Cree, Inc. – Bull call spreads were purchased on the maker of light emitting diode (LED) products straight out of the gate this morning ahead of Cree’s third-quarter earnings report after the final bell. Shares in the Durham, NC-based company are currently down 1.5% to stand at $40.46 as of 11:25am in New York. The stock is hovering just above its 52-week low of $40.25 set on Monday, which is less than half of Cree’s 52-week high of $82.85 recorded nearly one year ago on April 20, 2010. Traders initiating debit call spreads may…
Options Trader Positions for Airline Recovery Story
by Option Review - February 24th, 2011 4:24 pm
Today’s tickers: UAL, HBI, SFLY & TOL
UAL - United Continental Holdings, Inc. – The airline operator’s shares rose 4.3% this morning to an intraday high of $23.76, rebounding 9.7% off of its lowest point of the week at $21.65, but still trading substantially lower than last week’s closing price of $27.02. Shares relinquished some of the earlier gains this afternoon to stand 1.65% higher on the session at $23.16 as of 12:15pm in New York. At least one options strategist is positioning for UAL’s shares to continue recovering in the next couple of months. It looks like the investor employed April contract ratio call spreads to prepare for a sizable, albeit limited, correction higher by expiration day. The trader appears to have purchased approximately 3,000 in-the-money calls at the April $22 strike for an average premium of $2.49 apiece, and sold roughly 6,000 calls up at the April $27 strike for an average premium of $0.52 each. The net cost of the transaction amounts to an average of $1.45 per contract, and positions the trader to profit in the event that UAL’s shares rally 1.25% over the current price of $23.16 to surpass the average breakeven point on the upside at $23.45 by April expiration. Maximum potential profits of $3.55 per contract are available to the trader should shares in United Continental Holdings jump 16.6% to settle at $27.00 at expiration in a couple of months. The sale of twice as many higher-strike call options expose the investor to losses should the stock fly higher than he expects within the time remaining to expiration. Profits give way to losses on this strategy if shares in UAL jump 31.9% to exceed the upper breakeven price of $30.55 by April expiration day. The call options transacted in the ratio spreads represent opening positions given the minimal levels of open interest observed at either strike price.…