Safeway Options Pop After Kroger Co. Report; Bulls Take To Healthcare Calls
by Option Review - June 14th, 2012 2:28 pm
Today’s tickers: SWY, THC & LNCR
SWY - Safeway, Inc. – Options trades initiated on grocery store chain operator, Safeway, Inc., this morning suggests predictions regarding the performance of the stock over the near- and longer-term are mixed. Shares in the second-largest U.S. grocer are up 2.1% at $18.02 just after midday, rising in sympathy with Kroger Co., which reported better-than-expected first-quarter earnings, announced board approval of a $1 billion stock buyback program, and raised its full year earnings forecast. Safeway’s shares have been hard-hit in 2012; touching down at $17.53 yesterday, the lowest year-to-date price for the stock. However, the purchase of some 1,000 calls at the July $19 strike for a premium of $0.30 apiece may mean some traders are keeping an eye on the stock’s upside potential. Call buyers may be prepping for SWY shares to rebound should the company report better-than-expected second-quarter earnings on July 19th. Traders long the calls profit if shares in SWY rally another 7.1% to top $19.30 at expiration next month. Meanwhile, activity in longer-dated December expiry puts points to possible weakening in the price of the underlying in the second half of the year. It looks like one trader purchased a block of 2,000 puts at the Dec. $16 strike for a premium of $1.15 apiece. The options may represent an outright bearish bet that the stock has further to fall, or could be a hedge to protect the value of a long position in the underlying shares. The long puts make money, or yield downside protection, come expiration day should shares in SWY plunge 17.6% from the current price to breach the effective breakeven point on the downside at $14.85.
THC - Tenet Healthcare Corp. – A large block of call options purchased on health care services provider, Tenet Healthcare Corp., this morning suggests one strategist may be positioning for shares in the name to extend recent gains. Shares in THC received a boost earlier…
Options Point To Ugly 2011 Finale For JPMorgan
by Option Review - August 22nd, 2011 3:00 pm
Today’s tickers: JPM, BMC, LNCR & PSS
JPM - JPMorgan Chase & Co. – Put butterfly spreads on JPMorgan suggest shares in the banking institution may end the year substantially lower than their current level. The stock fell as much as 2.4% during the first half of the trading session to secure a new 52-week low of $33.54, but some options players appear to be positioning for the stock to drop another 31.0% before the end of 2011. Weekly options covering JPM are also gloomy, with traders selling calls at the August $35, $36 and $37 strikes ahead of expiration and Ben Bernanke’s speech on Friday. Investors dabbling in deep out-of-the-money put options expiring in December may be employing put butterfly spreads to either reduce the cost of taking an outright bearish stance on JPM, or to hedge positions in the underlying shares should the stock continue to slide in the months to come. It looks like investors picked up 4,709 puts at the December $28 strike for a premium of $1.59 each, sold 9,418 puts at the December $23 strike for a premium of $0.82 per contract, and purchased 4,709 puts at the December $18 strike at a premium of $0.44 apiece. The spreads cost an average net premium of $0.39 per contract. Bears buying butterfly spreads stand prepared to profit should JPM’s shares plunge 17.7% to breach the upper breakeven point at $27.61 by December expiration. Maximum potential profits of $4.61 per contract are available on the strategy in the event that JPMorgan’s shares surrender 31.4% of their value to settle at $23.00 at expiration in a few months. Shares in the financial services provider last traded around $23.00 back in March 2009. The stock has already lost roughly 31.0% since reaching its 2011 peak of $48.36 in February.
BMC - BMC Software, Inc. – Software vendor, BMC Software, popped up on our scanners today due to greater-than-usual activity in its put options. Shares in the Houston, TX-based company are up 0.95% to stand…
Bears Leave Footprints in DSW, Inc. Put Options Ahead of Earnings
by Option Review - August 26th, 2010 7:45 am
Today’s tickers: DSW, LNCR, VGZ, S, APOL, CAL & JCG
DSW – DSW, Inc. – Options traders are picking up put options on the footwear retailer ahead of the firm’s second-quarter earnings report, scheduled for release ahead of the opening bell on August 31, 2010. DSW’s shares fell 2.5% to $24.09 in late afternoon trading. Pessimistic players purchased approximately 3,400 put options at the October $22.5 strike for an average premium of $1.53 a-pop. Put buyers are poised to profit should DSW’s shares plummet 12.95% from the current price of $24.09 to breach the average breakeven point to the downside at $20.97 by expiration day in October. Options implied volatility on the stock is up 5.2% as of 3:30 pm ET.
LNCR – Lincare Holdings Inc. – The provider of oxygen and other respiratory therapy services popped up on our ‘hot by options volume’ market scanner today after bullish call buying was detected in the January 2011 contract. Lincare’s shares are up 0.50% to stand at $23.51 with just under 30 minutes remaining in the trading session. Investors positioning for substantial share price appreciation by expiration next year purchased roughly 1,100 calls at the January 2011 $27.5 strike for an average premium of $0.86 each. Call buyers at this strike make money if Lincare’s shares jump 20.6% to exceed the average breakeven price of $28.36 by expiration day. Bullishness spread to the higher January 2011 $30 strike where optimistic individuals scooped up more than 2,900 call options at an average premium of $0.45 apiece. Investors long the higher-strike contracts are prepared to accrue profits should LNCR’s shares surge 29.5% to trade above the effective breakeven price of $30.45 by expiration day next year. Lincare’s shares last traded above $30.45 back on July 1, 2010.
VGZ – Vista Gold Corp. – Bullish investors are mining for call options on the gold exploration and development company today, which suggests some traders expect Vista’s shares to head higher by the end of 2010. The Colorado-based company’s shares jumped 20.4% to touch an intraday high of $2.30. Investors in Vista Gold Corp. shares have had a fruitful month thus far. The stock is currently trading at a 76.9% premium over its July 28 low of $1.30 a share. Options strategists hoping to see the good times continue through to December expiration scooped up approximately 2,000 calls at the December $2.5 strike by shelling out…
Popular Bank Shares Surge as Option Player Stakes a Claim
by Option Review - September 16th, 2009 9:25 pm
Today’s tickers: BPOP, LNCR, EEM, XLK, XL, PALM, LIZ & MI
BPOP - The ‘popular’ bank popped up on our screens this afternoon after a large-volume risk reversal was established on the stock. The massive trade was likely the work of an investor with knowledge of commercial banks as approximately 60,000 contracts were exchanged on BPOP amid a more than 12% rally in shares of the underlying to $2.60. It appears the trader purchased 30,000 now in-the-money October 2.5 strike calls for an average premium of 33 cents apiece. He funded the purchase of the calls by selling 30,000 puts at the January 2.5 strike for 43 cents each. The investor received a net credit on the transaction of 10 pennies per contract. The motivation is perhaps that this individual is swimming with the rising tide of financial names today and expects a far larger rally lifting shares towards $3.75-resistance level. If this is the case, he is likely to exercise the calls by October’s expiration and take delivery of the underlying shares to ride with the stock’s upward momentum. Even if the move continues somewhat, it would likely reverse the structure of this trade to his advantage. – Popular, Inc. –
LNCR - The provider of oxygen and respiratory therapy services attracted option bulls today with shares of the firm standing more than 13% higher for the session to $29.85. Option implied volatility on LNCR exploded 50% higher from a low of 32% this morning to an intra-day high of 48%. The burst in volatility is likely due to increased investor demand for calls on the stock as well as greater uncertainty regarding future price movements in shares of Lincare. Perhaps the rise in uncertainty stems from news that Deutsche Bank raised LNCR’s target price from $33.00 to $38.00 today and maintained their ‘buy’ rating on the stock. Investors gobbled up 2,200 September 30 strike calls for an average premium of 31 cents. The contracts will expire worthless unless shares breach the $30.00-level to land in-the-money by Friday. Bullish sentiment spread to the October 30 strike where traders coveted 2,400 calls for about 71 cents premium. Investors long the calls will begin to amass profits if shares rally through the breakeven point at $30.71 by expiration in October. – Lincare Holdings Inc. –
EEM - The emerging markets exchange-traded fund jumped higher on our ‘most active by options volume’ market scanner…