Stock Options Watch: HPQ, VFC, CTB

HPQ – Hewlett-Packard Co. – Bullish options are changing hands on PC and printer maker, Hewlett-Packard Co., this morning, with shares in the name up sharply on comments from CEO, Meg Whitman, at the company’s Discover Conference in Las Vegas. Shares are currently up the most in the Dow Jones Industrial Average, trading higher by 3.1% at $25.00 as of 11:50 a.m. ET. The stock earlier rallied more than 5.0% to touch a new 52-week high of $25.49. Traders positioning for shares in HPQ to extend gains during the next couple of trading sessions snapped up weekly calls on the stock straight out of the gate this morning. The most active weekly calls by volume are the Jun 14 ’13 $25.5 strike contracts, with around 3,200 calls traded before midday in New York. It looks like most of the calls were purchased, with roughly 1,000 of the total volume picked up by one strategist at a premium of $0.23 each. The trader stands ready to profit at expiration should shares in the HPQ settle above the breakeven price of $25.73. The Jun 14 ’13 $26 strike calls are also active today, with around 350 lots purchased at an average premium of $0.08 apiece.

VFC – VF Corp. – Shares in the owner of a portfolio of well-known apparel and footwear brands, including The North Face, Timberland and Seven for All Mankind, rallied 0.80% to a new all-time high of $189.60 this morning following the company’s Investor Day conference on Tuesday. VF Corp. yesterday outlined revenue and growth targets and strategic initiatives. Analysts at Janney Montgomery Scott maintain a ‘Buy’ rating on the stock and raised their target price to $210.00 from $188.00. Fresh interest in July expiry puts on VFC this morning suggests one or more options traders are bracing for the price of the underlying to potentially decline during the next five weeks. The most actively traded contracts today are the Jul $180 puts, with upwards of 1,000 contracts in play versus open interest of 70 contracts. Time and sales data indicates most of the volume was purchased for an average premium of $2.65 apiece. The bearish position makes money if shares in VFC drop 6.5% from today’s high of $189.60 to breach the average breakeven point on the downside at $177.35 by expiration next month. VF Corp. reports second-quarter earnings on July 18th.

CTB – Cooper Tire & Rubber Co. – Upside call options purchased during the past few weeks on Cooper Tire & Rubber Co. are generating big profits for some traders today, with shares in the tire maker up more than 40% at $34.51 this morning after Indian tire maker, Apollo Tyres Ltd., agreed to acquire Cooper for $2.5 billion or $35.00 a share. On Monday of last week, one or more traders snapped up around 370 calls at the Jun $30 strike for a premium of $0.15 per contract. The sharp rally in the price of the underlying on news of the Apollo Tyres deal now finds those contracts changing hands at $4.40 as of 11:10 a.m. ET, a 29-fold increase in value since last week. Similarly, the buyer of 200 of the Jul $30 calls on May 30th for a premium of $0.25 apiece is enjoying an 18-fold increase in the value of those contracts, currently priced at $4.50 per contract, as of the time of this writing. Overall options volume on Cooper Tire & Rubber Co. is higher than usual today, with around 6,600 contracts in play as of 11:15 a.m. ET versus the stock’s average reading of around 300 contracts.

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About Caitlin Duffy 373 Articles

Affiliation: Interactive Brokers

Caitlin Duffy joined Interactive Brokers in 2009. In her role as Equity Options Analyst, Caitlin provides daily market commentary; highlighting various options trades, trading patterns and strategies of interest. Through Interactive Broker's webinar program, Ms. Duffy presents a number of educational, options-related events describing the theoretical pricing of options, the option Greeks as well as options strategies.

Interactive Brokers: Interactive Brokers offers direct market access to around 80 electronic global markets from a single account. Successful traders and investors understand that superior technology and lower trading costs can result in greater returns. For 32 years we have been building direct access trading technology that delivers real advantages to professionals worldwide. With consolidated equity capital of US $4.4 billion, IB and its affiliates exceed 1,000,000 trades per day. In addition, our prudent and conservative risk policies make Interactive Brokers a safe haven for your money. Discover some of the reasons why IB, the largest independent US broker/dealer, is the professional traders' and investors' choice.

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