Riverbed Options Active As Shares Soar
by Option Review - July 25th, 2012 1:45 pm
Today’s tickers: RVBD, LL & FCN
RVBD - Riverbed Technology, Inc. – Front month trading traffic on Riverbed Technology suggests the profits are flowing for one options strategist that hit it out of the park on a three-legged bullish position initiated ahead of the company’s second-quarter earnings report. Shares in the maker of computer networking products are up better than 26% to stand at $18.35 as of midday on the East Coast after the company posted better-than-expected earnings for the second quarter and said full year revenue is likely to increase more than analysts were expecting. It looks like one trader yesterday sold 2,000 puts at the Aug. $13 strike in order to partially offset premium required to buy a 2,000-lot Aug. $14/$17 call spread, all for a net premium outlay of $0.34 per contract. The sharp move to the upside in Riverbed’s shares overnight far exceeded the more than 15% rally required for the position to realize maximum possible profits. Activity in the options today suggests the trader is raking in the chips, closing out all three legs to enjoy net profits of $2.23 per contract in overnight gains. Meanwhile, traders positioning for Riverbed’s shares to extend gains in the near term picked up another 1,100 calls at the Aug. $19 strike for an average premium of $1.02 apiece. Call buyers may profit in the event shares tack on another 9% to exceed the average breakeven price of $20.02 by expiration next month.
LL - Lumber Liquidators Holdings Inc. – Shares in the retailer of hardwood flooring soared to a record today after the company posted better-than-expected second-quarter earnings and upped its full year profit and revenue forecasts. Lumber Liquidators shares jumped 25% to an intraday and new all-time high of $40.77 at the start of the session, sparking increased activity in options on the stock. Traders positioning for shares in Lumber Liquidators to continue higher in the near term purchased upside calls on…
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Time Warner Cable Call Buyer Tunes in for a Rally
by Option Review - February 14th, 2011 4:14 pm
Today’s tickers: TWC, RVBD, EXPE & CL
TWC - Time Warner Cable Inc. – An investor expecting shares in Time Warner Cable to pop ahead of March expiration initiated a large stock and option combination play just before 12:30pm in New York. Shares in the TWC are currently down 0.80% this afternoon to stand at $70.53. It looks like the trader enacted a delta neutral position, selling 150,000 shares of the underlying at $70.60 each, and buying 10,000 calls at the March $75 strike at a premium of $0.25 a-pop, on a 0.15 delta. The risk profile of the transaction is such that the trader may benefit somewhat on the short stock leg of the transaction should shares in the name slip in the near term. But, the profit and loss parameters of the position dictate substantially greater gains if Time Warner’s shares surge ahead of expiration day next month. If shares rally, gains on the long calls, which represent a far larger stake in the underlying than the 150,000 shares of which the investor is short, will trump losses realized on the short stock. The investor is well positioned to benefit nicely should the price of the underlying react as he predicts it will. Time Warner Cable’s reading of options implied volatility is up 5.1% on the session at 21.26% as of 1:30pm.
RVBD - Riverbed Technology, Inc. – Shares in Riverbed Technology increased as much as 4.0% this morning to secure an intraday- and new all-time high of $43.54. One big options player appears to be using call options in the name to position for the bullish momentum to continue through June expiration. It looks like the trader picked up 15,000 deep in-the-money calls at the June $39 strike for a hefty premium of $7.30 each, and sold the…
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Amphenol Corp. Calls in High Demand as Shares Rally to New Heights
by Option Review - February 1st, 2011 4:16 pm
Today’s tickers: APH, CAVM, PCX & RVBD
APH - Amphenol Corp. – Call options on the manufacturer of electrical, electronic and fiber optic connectors, interconnect systems and coaxial and specialty cable are in high demand this afternoon with shares trading up 3.2% to reach an all-time high of $57.10 by 12:25pm. Investors expecting Amphenol’s shares to continue to rise in the near term purchased in- and out-of-the-money call options in the February contract. More than 4,200 in-the-money calls changed hands at the February $55 strike on paltry previously existing open interest of 561 contracts. It looks like the majority of the calls were purchased for an average premium of $2.38 a-pop. Investors long the calls are poised to profit should shares in Amphenol Corp. surpass the average breakeven price of $57.38 ahead of February expiration. Bullish players looked up to the February $50 strike, as well, exchanging more than 1,400 calls at that strike on scant open interest of 10 contracts. Approximately 1,000 of the higher-strike call options traded on the ask for an average premium of $0.40 each. Traders purchasing the calls start to make money in the event that APH shares gain another 5.8% to exceed the average breakeven price of $60.40 before the contracts expire in a few weeks.
CAVM - Cavium Networks, Inc. – Shares in the provider of semiconductor processors shot up 14.7% in the first 15 minutes of the trading session to secure an intraday high of $45.35 following the firm’s better-than-expected fourth-quarter earnings report released after the close of trading on Monday. Cavium also revealed its forecast for first-quarter profit is greater than that of Wall Street, which helped shares higher and spurred a number of analyst upgrades today. Although signs of optimism on CAVM abound, a more pessimistic view appears to be playing…
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Creeping Confidence Emerging In Citi?
by Option Review - June 24th, 2009 6:18 pm
Today’s tickers: C, WLP, ORCL, PCAR, EK, TLB & RVBD
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DryShips upgrade attracts option investors to upper deck
by Option Review - April 17th, 2009 4:29 pm
Today’s tickers: DRYS, XTO, LGF, MCRI, RVBD, RF, HA, CBS, PCLN
DRYS DryShips, Inc. – The drybulk carrier’s share price rally of more than 25% to $6.94 breathes new life into DryShips’ sails today amid an upgrade to ‘outperform’ from ‘market perform’ by an analyst at Oppenheimer & Co. this morning. The company has also managed to raise $500 million via equity offering that it plans to use to decrease its massive debt. Option investors saluted the bullish news by purchasing calls in the May contract. At the May 7.5 strike price 7,300 calls were picked up for an average premium of 59 cents apiece. Shares need only rise by an additional 7% in order for the May 7.5 strike calls to land in-the-money by expiration next month. More optimistic traders selected the May 9.0 strike and bought 3,000 calls for about 28 cents per contract. Another positive sign for the cargo-carrier was the sale of 1,400 puts at the May 6.0 strike price for 74 cents each as some investors hope that shares remain above the breakeven on the trade at $5.26 by expiration. While much of the activity we observed was bullish in the May contract, we did notice that some downside protection was sought at the May 7.5 strike price as about 2,100 in-the-money puts were picked up at an average premium of 1.55 each.
XTO XTO Energy, Inc. – Shares of the oil and gas exploration company have rallied by more than 3% to $35.20. XTO edged onto our ‘most active by options volume’ market scanner after one investor took profits by closing a short put position. It appears that this individual originally established a short position on March 11, 2009, by selling 19,500 puts at the August 22.5 strike price for a premium of 1.86 apiece. Today, he purchased the lot of 19,500 puts at the same strike for an average price of 75 cents apiece. The difference between the two put premiums yields this investor 1.11 today for closing the position. It looks as though he plans to once again profit from a similar trade as he sold 15,000 puts at the August 26 strike price for an average premium of 1.35 apiece.
LGF Lions Gate Entertainment Corporation – The diversified independent producer and distributor of motion pictures jumped to the top of our ‘hot by options volume’ market scanner after one investor…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW.