Posts Tagged ‘OSIP’

Options Trader Sends Bullish Signal by Enacting Ratio Call Spread on Salesforce.com

Today’s tickers: CRM, CPB, VALE, GDX, CNX, SLV, OSIP, BONT, UA & XRT

CRM – Salesforce.com, Inc. – A large-volume ratio call spread on the provider of customer relationship management services this afternoon implies one options investor expects CRM shares to rally significantly by August expiration. Salesforce.com’s shares increased as much as 1.83% today to reach a new 52-week high of $81.23 during the current session. According to a Reuters report this weekend, analysts at Deutsche Bank maintain their ‘buy’ rating on the stock and raised their share price target on CRM to $110 from $100. The optimistic options trader populating the stock this afternoon purchased 13,000 calls at the August $85 strike for a premium of $5.00 apiece, and sold 26,000 calls at the higher August $100 strike for $1.05 each. Net premium paid by the investor for the transaction amounts to $2.90 per contract. Maximum available profits of $12.10 per contract accumulate for the trader if shares of the underlying stock surge at least 23% from the new 52-week high of $81.23 to reach $100.00 by August expiration. The investor starts to make money as long as CRM’s shares trade above the effective breakeven point at $87.90 ahead of expiration day.

CPB – Campbell Soup Co. – Options traders anticipating a sharp increase in the price of Campbell Soup Co.’s shares by November expiration scooped up record numbers of call options on the global manufacturer and marketer of branded convenience food products today. CPB’s shares traded 0.25% higher in late afternoon trading to $35.45, which is just off their current 52-week high of $35.80 (attained back on December 2, 2009). Campbell-bulls purchased approximately 5,200 calls at the November $40 strike for an average premium of $0.55 per contract. Investors holding these contracts are prepared to profit should Campbell’s share price jump 14.4% from the current price to exceed the average breakeven point to the upside at $40.55. Investors exchanged roughly 5,925 option contracts on CPB during the trading session, which represents 56% of the total existing open interest on the stock of 10,567 lots.

VALE – Vale S.A. – Diverse bullish options strategies employed on Brazilian metals and mining company, Vale S.A., today indicates investors are expecting the price of the iron-ore maker’s shares to appreciate in the next few months. Vale’s shares rallied 1.20% at the start of the session to an intraday high – and new…
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Optimistic individual Initiates Mammoth Bullish Risk Reversal Play on Conseco

Today’s tickers: CNO, OSIP, HIG, FXI, JDSU, ARQL, GNW, TEVA, KO & UBS

CNO – Conseco, Inc. – The holding company for a number of insurance companies, such as Colonial Penn Life Insurance Co. and Washington National Insurance Co., popped up on our ‘most active by options volume’ market scanner late in the session after a massive bullish risk reversal was established on the stock in the January 2011 contract. Conseco’s shares declined 0.80% during the course of the trading day to stand at $6.18. It looks like one optimistic options player sold 33,727 puts at the January 2011 $5.0 strike for a premium of $0.50 apiece in order to partially finance the purchase of 33,727 calls at the same strike for $1.80 each. The net cost of the transaction amounts to $1.30 per contract. Thus, the investor responsible for the reversal is prepared to amass profits if Conseco’s shares rally through the breakeven price of $6.30 ahead of expiration day in January. The 67,454 contracts involved in the spread trump existing open interest on the stock of 48,756 lots.

OSIP – OSI Pharmaceuticals, Inc. – The outline of a slightly lopsided iron condor appeared in the May contract on OSI Pharmaceuticals, indicating one options investor expects shares of the biotechnology company to trade within a specified range through expiration. OSIP’s shares surrendered 0.85% during afternoon trading to stand at $59.55 perhaps after The Wall Street Journal reported that Astellas Pharma, Inc. is extending its tender offer for OSI Pharmaceuticals – valued at $3.5 billion – by three weeks to April 23, 2010. The investor responsible for the iron condor play essentially enacted two credit spreads, one using put options and the other calls, in order to pocket options premium. On the call side, the trader shed 4,000 contracts at the May $60 strike for a premium of $1.90 apiece, spread against the purchase of the same number of calls at the higher May $62.5 strike for $0.90 each. As for the puts, the investor sold 4,000 lots at the May $55 strike for a premium of $0.94 per contract, marked against the purchase of 4,000 puts at the lower May $50 strike for $0.62 each. Notice that the put credit spread is wider than the spread on the call side, which creates a lopsided iron condor in this case. The net credit pocketed by the trader amounts to $1.32…
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