UAL Corp. (UAUA: 23.74 0.00 0.00%) - The Chicago-based owner and operator of United Airlines appeared on our ‘most active by options volume’ market scanner late in the trading session. UAUA’s shares increased nearly 6.00% in the first half of the trading day to secure a new 52-week high of $24.28. The airline operator’s shares are currently up 4.40% at $23.92 with 15 minutes remaining before the closing bell. One optimistic options strategist appears to have initiated a bullish risk reversal, selling 4,750 puts at the September $17 strike for a premium of $0.78 each, and buying the same number of calls at the higher September $27 strike for a premium of $1.63 apiece. The net cost of the transaction amounts to $0.85 per contract and prepares the responsible party to profit if shares of the underlying stock jump 14.7% over the new high of $24.28 to surpass the effective breakeven point to the upside at $27.85 by September expiration.
Live Nation Entertainment, Inc. (LYV: 12.35 0.00 0.00%) - Shares of the producer of live music concerts surged more than 4.65% to $12.36 late in the trading day. The rally in the price of the underlying stock inspired bullish options trading strategists to take action. One optimistic investor sold short 12,900 puts at the July $10 strike to pocket an average premium of $0.125 per contract. The trader keeps the full $0.125 premium per contract as long as Live Nation’s shares exceed $10.00 through July expiration. The put seller is obliged to have shares of the underlying stock put to him at an effective price of $9.875 if the puts land in-the-money by expiration day next month.
Caterpillar, Inc. (CAT: 63.46 0.00 0.00%) - Bullish options traders stampeded machinery maker, Caterpillar, Inc., today with the firm’s shares rallying more than 2.75% to stand at $62.70 as of 12:55 pm (ET). CAT’s shares increase as much as 3.4% to touch an intraday high of $63.10 in the first half of the trading day. Near-term optimists sold at least 2,200 puts at the June $62.5 strike for an average premium of $1.06 apiece. Investors selling the puts could be ditching downside protection, or may be selling the contracts outright to pocket available put premium. CAT-bulls also purchased some 1,800 now in-the-money calls at the June $62.5 strike for an average premium of $0.88 apiece. Call buyers at this strike price are poised to profit should shares of the tractor manufacturer rally above the average breakeven price of $63.38 before the contracts expire on Friday. Caterpillar’s overall reading of options implied volatility is down 5.3% to 38.11% in afternoon trading.
Novatel Wireless, Inc. (NVTL: 6.08 0.00 0.00%) - The provider of wireless broadband access solutions to the worldwide mobile communications market popped up on our ‘hot by options volume’ market scanner in the first half of the trading session. Long-term bullish individuals opted to sell short put options in the January 2011 contract today with shares of the underlying stock rallying 2.25% to $5.94. Earlier in the session NVTL’s shares touched an intraday high of $5.98. Optimistic options traders sold at least 2,700 puts at the January 2011 $5.0 strike to pocket an average premium of $0.40 per contract. Investors short the puts keep the full premium received today as long as Novatel’s shares trade above $5.00 through January 2011 expiration. Put sellers are apparently happy to have shares of the underlying stock put to them at an effective price of $4.60 each in the event that the put options land in-the-money at expiration.
Financial Select Sector SPDR (XLF: 14.7925 0.00 0.00%) - Shares of the XLF, an exchange-traded fund designed to provide investment results that correspond to the price and yield performance of the Financial Select Sector of the S&P 500 Index, rallied 1.3% to $14.64 by 1:25 pm (ET). Early in the trading session one cautiously optimistic options player rolled a large-volume put position from the June contract to the July contract. The investor sold 50,000 in-the-money puts at the June $15 strike for a premium of $0.54 apiece in order to purchase the same number of in-the-money puts at the July $15 strike for a premium of $0.86 each. The net cost of the calendar roll amounts to $0.32 per contract. The individual responsible for the transaction is likely extending downside protection originally established to protect the value of a massive position in shares of the underlying fund. It is unclear how much the trader paid initially to purchase the June $15 strike puts. But, in isolation, the $0.32 net cost incurred today to roll the puts to the July contract creates an approximate breakeven price of $14.68 for the investor.
Gamestop Corp. (GME: 20.71 0.00 0.00%) - Shares of the video game retailer plunged 9.5% to touch an intraday low of $19.80 this morning after the world’s largest consumer electronics retailer, Best Buy Co., said it plans to allow customers to trade in used video games in more than 1,000 U.S. stores. BBY’s announcement sent GME shares tumbling on sentiment the trade-ins policy will cut into Gamestop Corp.’s sales of video games and gaming devices. The news spurred bearish options traders to action. Investors anticipating continue bearish movement in GME’s share price purchased at least 1,800 puts at the June $20 strike for an average premium of $0.27 apiece. Put buyers at this strike price profit if Gamestop’s shares trade below the average breakeven price of $19.73 ahead of expiration day on Friday. Buying interest spread to the lower June $19 strike where 1,200 puts were picked up for an average premium of $0.15 each. GME’s shares must fall another 4.8% from today’s low of $19.80 in order for June $19 strike put buyers to make money beneath the average breakeven point of $18.85. The overall reading of options implied volatility on the video game retailer shot up 12.4% to 45.33% by 11:42 am (ET).
Green Mountain Coffee Roasters, Inc. (GMCR: 26.64 0.00 0.00%) - Shares of the specialty coffee and coffee maker company rallied more than 8.9% this morning to secure an intraday high of $27.34 perhaps on news imports of organic coffee into the U.S. and Canada exceeded 93 million pounds last year on rising demand. GMCR’s share price cooled slightly heading into mid-session with the stock currently up 6.37% to $26.70 as of 11:25 am (ET). Investors itching for continued bullish movement in the price of the underlying stock purchased at least 1,800 calls at the July $30 strike for an average premium of $0.36 apiece. Call buyers at this strike price stand prepared to profit should Green Mountain Coffee Roasters’ share price increase another 13.7% to surpass the average breakeven point at $30.36 by July expiration. The overall reading of options implied volatility on the coffee company is higher by 6.5% to 47.75% as of 11:30 am (ET).
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