FDX – FedEx Corp. – Shares in FedEx rose as much as 7.25% on Tuesday morning to $106.00, the highest level since March, fueled by speculation the company may be the target of activist investor and Pershing Square Capital Management L.P. CEO, Bill Ackman. Rumors sparked heavy trading in FDX options, with volume nearing 60,000 contracts by 11:55 a.m. ET versus average daily volume of around 6,700 contracts. Trading in FedEx calls is outpacing that of puts, pushing the call/put ratio to 3.35 at midday. Options traders that were quick to place short-term bullish bets on the stock straight out of the gate this morning are seeing big intraday gains in the value of their positions today. It looks like early-movers picked up roughly 1,300 weekly calls at the Jul 12 ’13 $103 strike for an average premium of $0.79 per contract during the first hour of trading. These contracts are now in the money and changing hands at a last-traded price of $3.35 each, a roughly four-fold increase since this morning, as of 12:15 p.m. in New York.
MCP – Molycorp, Inc. – Upside call options in play on rare metals mining company, Molycorp, Inc., this morning look for shares in the name to rebound in the near term. Shares in MCP are up 4.0% today at $6.04 as of 12:15 p.m. ET. The most actively traded contracts on Molycorp as measured by volume are the Aug $7.0 strike calls, with volume in excess of 12,500 contracts versus open interest of 2,699 lots. Time and sales data suggests most of the volume was purchased for an average premium of $0.24 apiece, thus positioning call buyers to profit in the event that MCP shares rally 20% over the current price of $6.04 to exceed the average breakeven point at $7.24 by August expiration. Shares in Molycorp, down roughly 70% since this time last year, last traded above $7.24 at the end of May.
NYCB – New York Community Bancorp, Inc. – Put buying on New York Community Bancorp looks for shares in the bank holding company to potentially decline, perhaps following the company’s second-quarter earnings report on July 24th. Shares in NYCB, up roughly 14% during the past five weeks, rose 1.2% today to a new six-month high of $14.73 by 12:30 p.m. ET. The buyer of around 2,000 puts at the Aug $14 strike at a premium of $0.20 per contract may be hedging a long position in the underlying shares ahead of earnings, or initiating an outright bearish bet on the stock. The put position makes money if shares in NYCB decline more than 6.0% from the current price to trade below the effective breakeven point on the downside at $13.80 by August expiration. In contrast, two weeks ago we noted heavier than usual trading in October expiry call options on NYCB, with roughly 1,500 of the Oct $15 strike calls purchased at a premium of $0.15 per contract the morning of June 27th. The bullish position makes money if shares in New York Community Bancorp extend gains during the next few months.