Diageo Options In Play Ahead Of Earnings
by Option Review - January 22nd, 2013 1:32 pm
Today’s tickers: DEO, TRV & TSS
DEO - Diageo PLC – A burst of options activity on the distributor of premium alcohol brands near the start of a shortened U.S. trading week pushed Diageo onto our ‘hot by options volume’ market scanner this morning. Call and put buying on the name suggests one or more traders are positioning for volatility in the price of DEO shares ahead of the company’s fourth-quarter earnings report on January 31st. Shares in Diageo are currently down 0.90% on the session to stand at $116.61 as of 10:55 a.m. ET in New York trading. Upside call buyers looking for shares in the name rise substantially during the next few weeks snapped up more than 580 calls at the Feb. $120 strike for an average premium of $0.70 apiece. Traders long the $120 calls stand ready to profit at expiration next month should DEO shares rally 3.5% to top $120.70. February expiry put options are changing hands on Diageo today, as well. Traders bracing for shares in the distributor of Johnnie Walker to potentially decline in the weeks ahead picked up around 340 puts at the Feb. $115 strike and some 540 puts at the Feb. $110 strike at average premiums of $1.35 and $0.45 apiece, respectively. Buyers of the $110 strike puts are positioned to profit in the event of a more than 6.0% dip in the price of the underlying to $109.55 by February expiration.
TRV - Travelers Companies, Inc. – Shares in the insurer increased the most in the Dow Jones Industrial Average on Tuesday morning, rallying nearly 5% to a new all-time high of $80.00, after the company posted better-than-expected fourth-quarter earnings ahead of the opening bell. TRV’s shares are currently off their highest level of the session, up 2.6% at $78.28 as of 10:50 a.m. ET. Trading traffic in February expiry calls in the early going suggests some traders are positioning for Travelers’ shares to extend gains in the near term. Bullish strategists appear to have purchased upwards of 325 calls at the Feb. $80 strike for…
Straddle-Strategist Sells Flextronics Options
by Option Review - March 3rd, 2011 4:29 pm
Today’s tickers: FLEX, BMY, CQB & TSS
FLEX - Flextronics International, Ltd. – The Singapore-based provider of electronics manufacturing services popped up on our scanners after one big player sold a massive straddle in the July contract. Shares in Flextronics are currently up 5.0% at $8.14 as of 11:55am in New York. The sizable straddle play composed of a total of 49,000 FLEX options is almost on par with the overall level of open interest on the stock of 56,483 contracts. It looks like the investor is reeling in time-rich, in-the-money call premium as well as just out-of-the-money put premium, in the expectation that volatility will come off and shares in the name will remain around this level. The straddle-strategist sold 24,500 calls at the July $8.0 strike for a premium of $0.70 each, and sold 24,500 puts at the same strike for a premium of $0.60 apiece. Gross premium pocketed on the transaction amounts to $1.30 per contract. The trader keeps the full premium received on the sale as long as shares in FLEX settle at $8.00 at expiration in July. The short straddle strategy implies the investor at least sees shares trading within a certain range through expiration. In this case, the trader keeps some of the premium received and staves off losses unless shares in FLEX swing above the upper breakeven price of $9.30, or slip beneath the lower breakeven point at $6.70. The short stance in both call and put options expose the trader to potentially devastating losses in the event that shares work against him in the next few months. However, the investor need not hold the position to expiration. The trader may be able to buy back the straddle at an advantageous price at some point, benefiting from the erosion of time value as well as subsiding levels of implied volatility.…