ICICI Bank Call Buyer Rings The Register
by Option Review - May 13th, 2014 3:01 pm
Shares in ICICI Bank Ltd. (Ticker: IBN) rallied nearly 20% in the first two weeks of May to touch $50.97 on Monday, the highest level since April of 2011. IBN is moving higher amid strong performance in Indian equities spurred by recent elections in the country. The chart below shows periods of relative outperformance in ICICI Bank’s shares versus the broader NIFTY Index, including recent outperformance of the shares.
Front month options activity on the operator of a network of banks in India today suggests one strategist who was well positioned to benefit from recent gains in IBN shares, may be taking significant gains off the table by rolling a previously established bullish call position on the stock up to a higher striking price. It looks like the trader originally purchased 2,300 of the 16May’14 46.0 calls at a premium of $0.62 each, one week prior to today, on the morning of May 6th. Strong gains in the price of the underlying shares in the one-week period boosted premium on the now deep in-the-money call options, which the trader appears to have sold this morning at a premium of $2.98 apiece. Gains on the position in that case amount to an impressive $2.36 per contract or 380% return in one week’s time.
The options player appears to have initiated a fresh bullish trade on IBN as well, with the purchase of 2,300 of the 16May’14 50.0 strike call options for a premium of $0.68 per contract, which traded at the same time and in the same size as the 46.0 calls, just before 10:00 a.m. ET this morning. The May 50.0 calls make money if shares in ICICI Bank extend gains this week, with profits available on the contracts at expiration on Friday in the event that IBN shares exceed the effective breakeven price of $50.68. Shares in ICICI Bank Ltd. are trading lower this morning, down almost 3.0% at $48.20 as of 10:45 a.m. ET in New York.
Chart – Banking shares boost Indian stock market as election results promise change
Investor Uses Options to Strangle Ford’s Share Price through June 2010
by Option Review - January 6th, 2010 4:14 pm
Today’s tickers: F, WLP, IBN, SWHC, UNG, SNDK, MU, DTV, FDO & MON
F – Ford Motor Co. – A short strangle play in the June contract on Ford suggests shares of the automaker are likely to remain range-bound through the next six months to expiration. Ford’s shares continued to rally during the current session following yesterday’s news that the firm enjoyed a 33% increase in December auto sales over the previous year. Shares reached a new 52-week high of $11.42 today on a 4.20% increase over Tuesday’s close. The sold strangle transaction implies one investor expects the recent boom to dissipate along with option implied volatility. The strangler sold 15,000 puts at the June $10 strike for a premium of $0.80 cents apiece in combination with the sale of 15,000 calls at the higher June $12 strike for $1.10 each. The investor pockets a gross premium of $1.90 per contract, which he keeps if Ford’s share price stays within the confines of the strike prices described through expiration. The premium received provides limited protection should shares swing outside the boundaries. But, the investor faces losses in the event that shares move above the upper breakeven price of $13.90, or trade beneath the lower breakeven point at $8.10 by expiration in June. It is possible the strangle-seller expects to benefit from a move lower in volatility. Option implied volatility on Ford rose significantly by 18.87% over the past 48-hours, from a low of 40.85% on Tuesday morning, to today’s high of 48.56%. Shrinkage in the reading of volatility on Ford may allow the investor to close out the short position at a profit because, as a general rule, declines in volatility weigh down option premiums.
WLP – WellPoint, Inc. – Shares of the health and benefits company reached another new 52-week high of $61.45 today, adding to gains experienced earlier this week. The stock appreciated 5.5% from $58.27 on the final day of 2009, up to $61.45 today, the highest price attained in the past 12 months. Option traders displayed diverse strategies on WellPoint during the trading day. Near-term players banked gains by selling 7,000 calls at the now in-the-money January $60 strike for a premium of $1.70 apiece. One trader rolled 3,500 calls forward to a higher strike by selling-to-close 3,500 lots at the January $60 strike for $2.00 each, and buying up 3,500 calls at the higher February…
Emerging Markets ETF sees option traders locking into strong rally
by Option Review - May 18th, 2009 4:15 pm
Today’s tickers: EEM, VALE, CSCO, ALL, IBN, STT & XLE
CSCO – Networking and communications products manufacturer…