Stryker Call Options Active
by Option Review - May 30th, 2014 3:37 pm
Shares in Stryker Corp. (Ticker: SYK) popped 6.0% this week to as high as $85.62 this morning after a report in the Financial Times earlier in the week said the company may be planning to make a bid for orthopaedics company, Smith & Nephew Plc. The company has since said it does not plan to make an offer for Smith & Nephew, but shares remain elevated and at their highest level in roughly a decade. Upside call buying across several expiries on Stryker caught our eye this morning. It looks like some options traders are positioning for shares in the name to continue to push to the upside during the back half of 2014.
Traders appear to have purchased almost 300 of the Jul 90.0 calls at a premium of $0.50 each. These contracts may be profitable at July expiration in the event that SYK shares rally another 6.0% over the current level to exceed the effective breakeven point at $90.50. Meanwhile, the 87.5 strike calls expiring in September and January 2015 were the most traded contracts on Friday morning. It looks like traders shelled out $2.05 in premium to buy more than 800 of the Sep 87.5 strike calls and paid around $3.20 per contract for 1,000 of the Jan ’15 87.5 strike calls.
Shares in Stryker are off their highest level of the session, trading up 0.75% at $84.55 as of 11:30 a.m. ET. Shares may have received a lift from a note out of Deutsche Bank about a Stryker bid for Smith & Nephew. Deutsche Bank has a ‘Buy’ rating on Stryker and a $90.00 price target.
Fickle Friday – Google Goes Down as Costs Inflate
by phil - April 15th, 2011 8:19 am
Well who’d have thunk it?
The cost of doing business is rising and GOOG happens to be one of those businesses that lacks pricing power as their rates are generally set through an auction process and their users have to VOLUNTEER to pay more money to advertise. Most advertisers on Google are on fixed budgets, like MSM advertisers and Google has done a great job of replicating that model. Why then, should it be surprising if a maturing Google begins to look more like a traditional media outlet than a dot com company with exploding growth?
Don’t get me wrong, we love Google long-term but we did short them as well as BIDU into Google earnings as we felt Google would disappoint enough to spook BIDU investors as well. We’re taking the short money and running and looking for some bullish plays now – the drop from $630 last month to $545 today is plenty of froth blown off the top for us to get long-term interested again. As you can see from the tag cloud of the Conference Call, growth is still there, especially in mobile display ads (Android a bit disappointing) and no major negatives. I’m not going to write a whole thing about GOOG though, there are thousands of people doing that and our Members know well enough where I stand. I’m more interested in examining the bigger picture.
We expected Q1 earnings to be rough and we’ve already seen FDX, NKE, ORCL, RIMM, FAST, FCS and AA struggle so hopefully you don’t have to be hit on the head with another whole week of earnings before you get a little more cautious. Next week we hear from C, HAL, LLY, TXN, BK, GS, INTC, IBM, SYK, USB, VMW and YHOO on Monday and Tuesday and then we’re off to the races with hundreds of companies reporting each week for the rest of the month. Our job in the first few weeks of earnings season is to get a feel for the quarter and, so far, that feeling is rough.
It’s all about inflation, of course and don’t say we didn’t warn you about that one! We went more bearish up at those 100% lines we’ve been watching and now the question really is – how bad was it? Inflation is, after all, our long-term BULLISH premise. We don’t think corporations…
Pfizer options active in late trading
by Option Review - March 24th, 2009 4:58 pm
Today’s tickers: PFE, HPQ, EFA, C, AGN, VIX, LTD, XHB, SYK, IP & TGT
PFE Pfizer Inc. – Shares of the pharmaceutical company have declined slightly by less than 1% to stand at $13.93. Pfizer edged onto our ‘most active by options volume’ market scanner late in the afternoon after some interesting trades went through in the January 2011 contract. At the 15 strike one investor initiated a sold straddle by shedding 10,000 calls for a premium of 2.05 as well as 10,000 puts for 3.60 apiece. The gross premium enjoyed on the trade amounts to 5.65 and is retained in full if shares settle at $15 by expiration. This trader is expecting shares to remain mid-way between the 52-week low for Pfizer of $11.62 and the 52-week high at $20.32. In contrast, a bullish investor purchased 11,500 calls at the January 20 strike price for 80 cents per contract. This investor is hoping to see shares rally by 49% over the next 2 years to arrive at or above a breakeven share price of $20.80.
HPQ Hewlett-Packard Co. – Shares of the technology company have dipped slightly by less than 1% to $31.08. We observed a call-to-put ratio of about 3.0 which implies that call options traded three times for each put traded. However, the calls were nearly all sold. The November contract stood out with 8,400 calls sold at the 35 strike price for an average premium of 2.80. Another 11,000 calls were shed for 2.00 at the November 37.5 strike price. No open interest was previously recorded at either of these strikes, and therefore these calls were sold short by investors. Moving into the January 2010 contract, it appears that one individual sold 3,750 in-the-money calls at the 30 strike price for a premium of 5.50, while purchasing the same number of puts at the 32.5 strike for 5.80 apiece. This transaction leaves the trader with a net cost of 30 cents and a breakeven share price at which profits begin to amass on the downside at $32.20. Thus, the overall tapestry woven together by option trades depicted some species of large bear. One trade initiated in January ran counter to rest as one investor purchased 12,500 calls at the 32.5 strike price for a hefty premium of 4.35. Shares would need to rally by about 19% from the current price in order for the investor…