Vonage Shares Rally To Highest Level In Two Years
by Option Review - October 10th, 2013 5:15 pm
VG – Vonage Holdings Corp – Options volume on communications services company Vonage is up sharply today, with over 1,100 contracts changing hands during morning trading versus average daily options volume of around 65 contracts, after the company agreed to acquire privately-held company Vocalocity, Inc. for $130 million in cash and stock. Shares in Vonage are soaring on the news, up as much as 23% to touch a new two-year high of $3.75 during the first half of the session.
Traders taking to Vonage options in the early going on Thursday appear to be buying upside calls on the stock. The most traded contracts so far today are the Oct $4.0 strike calls, with around 500 lots purchased at a premium of $0.05 each. Traders also appear to have purchased around 300 of the Nov $4.0 strike calls for a premium of $0.15 apiece. Buyers of the Nov $4.0 strike calls may profit at expiration next month if shares in VG rally another 11% to exceed the breakeven price of $4.15 each. Shares in Vonage last traded above $4.15 in July of 2011.
CTXS – Citrix Systems, Inc. – Shares in cloud computing company, Citrix Systems, dropped 13% on Thursday morning to as low as $58.00 after the company yesterday announced preliminary third-quarter results, lowering its revenue guidance to a range of $710 to $712 million from a previous estimate of $730 to $740 million, and reducing net income expectations to a range of $0.39 to $0.40 a share from previous guidance of $0.41 to $0.42 a share. The release of disappointing preliminary results and the subsequent sharp drop in the price of the underlying sparked heavier than usual trading in CTXS options today.
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Three-legged Bull Eyes Archer-Daniels-Midland Co. Options
by Option Review - July 20th, 2011 4:08 pm
Today’s tickers: ADM, ETFC, VG & XLNX
ADM - Archer-Daniels-Midland Co. – A couple of weeks ago demand for call options on one of the world’s largest processors of corn, wheat, cocoa and other feedstuffs jumped after Warren Buffet said Archer-Daniels-Midland is the “kind of company we look at” in regards to the search for acquisition candidates. Today, ADM options appear to be popular with at least one strategist positioning for further upside movement in the price of the underlying shares through the end of 2011. Shares in the food products company increased as much as 1.4% this morning to $31.00 by 11:30 am in New York. The stock still trades at an 18.5% discount off its more than 3-year high of $38.02 attained in February. Bullish action in ADM options and the bump-up in shares follow a study released by Purdue University economists on Tuesday showing, among other things, that high food prices are expected to persist for the next one to two years. The U.S. government in February said U.S. farm income may reach $94.7 billion this year. Archer-Daniels-Midland is scheduled to report fourth-quarter earnings ahead of the opening bell on August 2. One options trader expecting shares to near multi-year highs by December expiration initiated a three-legged bullish transaction straight out of the gate this morning. It looks like the investor sold 1,000 puts at the December $28 strike for a premium of $1.16 each in order to finance the purchase of a 1,000-lot December $32/$36 call spread at a cost of $1.14 apiece. The sale of the put options more than offset the cost of the bull call spread, thereby yielding a net credit of $0.02 per contract to the investor. The trader adds to his gains in the event that shares in ADM rally another 3.2% over the current price of $31.00 to surpass the effective breakeven price of $32.00 at expiration. Maximum potential profits of $4.02 per contract, including the net credit received, are available to the investor should shares in the feedstuffs producer jump 16.1% to trade above $36.00 at expiration day in December. Shares in ADM last traded above $36.00 at the beginning of May.…