Stock Options Watch: GCI, KO, MYGN

GCI – Gannett Co., Inc. – Shares in USA Today publisher, Gannett Co., Inc., jumped nearly 30% at the start of the trading session to a five-year high of $25.69 after the company agreed to purchase Belo Corp. for $1.5 billion in cash and assume $715 million in existing debt. The merger will make Gannett the fourth-largest U.S. owner of major network affiliates, doubling the company’s existing broadcast portfolio from 23 to 43 stations, according to a press release issued by the companies. The announcement and subsequent double-digit percentage move in the price of GCI shares sparked heavier than usual options activity on the stock today. Upwards of 9,500 contracts have changed hands on Gannett as of 11:50 a.m. ET versus average daily volume of around 2,100 contracts. It looks like some traders are purchasing put options on Gannett today, perhaps positioning for shares in the name to surrender some of the gains in the near term. Front month put buyers looked to the Jun $25 and $26 strikes, picking up around $350 of the $25 strike puts for an average premium of $0.82 apiece, and buying 200 of the $26 strike puts at a premium of $1.15 each. Traders may profit at expiration next week should shares in GCI decline 5.9% and 3.3% from today’s high of $25.69 to breach average breakeven points on the downside at $24.18 and $24.85, respectively. Similar strategies were initiated in the Jul $24 and $25 strike put options in the early going on Thursday.

KO – Coca-Cola Co. – Mixed trading in weekly options on Coca-Cola Co. this morning suggests some traders are positioning for shares in the world’s largest beverage company to move ahead of the weekend. The stock is currently down 1.25% at $39.89 as of 12:10 p.m. ET, even as U.S. stocks rebound following three consecutive days of declines. One trader betting shares in KO reverse declines by expiration appears to have purchased around 1,300 calls at the Jun 14 ’13 $40 strike at a premium of $0.20 each. The upside calls make money at expiration as long as the price of the underlying rallies 0.80% over the current price of $39.89 to exceed the breakeven point at $40.20. Meanwhile, buyers of the Jun 14 ’13 $39.5 and $40 strike puts look for shares to extend losses. Traders appear to have purchased around 350 of the $39.5 strike puts for an average premium of $0.14 each and roughly 200 of the $40 strike puts at an average premium of $0.36 apiece. Bearish positions in the $39.5 and $40 strike contracts may be profitable at expiration should KO’s shares settle below average breakeven points at $39.36 and $39.64, respectively.

MYGN – Myriad Genetics, Inc. – Shares in Myriad Genetics popped nearly 13% to a new four-year high of $38.27 on Thursday morning after portions of a U.S. Supreme Court decision on the patenting human genetic sequences were viewed as favorable for the company. Traders positioning for the price of the underlying to extend gains during the next five weeks snapped up July expiry calls on the stock. The most actively traded July contracts as measured by volume are the $37 calls, with more than 1,000 lots in play versus open interest of 86 contracts. Time and sales data suggests most of the volume was purchased for an average premium of $1.20 each. Call buyers stand ready to profit at expiration next month should shares in MYGN rally 3.6% over the current price of $36.87 to top the average breakeven point at $38.20. Overall volume in Myriad options of 11,700 contracts as of 12:30 p.m. ET is well above the stock’s average daily level for the metric of approximately 1,900 contracts.

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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