Stock Options Watch: DIS, JAKK, GAME

By Jul 19, 2013, 2:39 PM Author's Blog  

DIS – Walt Disney Co. – Shares in Disney are off 0.50% on the session at $65.50 amid declines in U.S. stocks, but trading traffic in weekly call options this morning suggests some traders are looking for the price of the underlying to reverse course in the near term. The Jul 26 ’13 $67.5 strike call options on Disney are active for a second consecutive session, with around 600 contracts traded as of 11:20 a.m. in New York. It looks like most of the calls were purchased in the early going for an average premium of $0.14 apiece. The bullish position may be profitable at expiration next week should shares in Disney rally more than 3.0% over the current price of $65.50 to exceed the average breakeven point at $67.64. Yesterday afternoon, roughly 400 of the $67.5 strike calls were purchased for a premium of $0.23 each. The weekly calls expire prior to Disney’s third-quarter earnings report on August 6th.

JAKK – Jakks Pacific, Inc. – Put activity on toy producer, Jakks Pacific, Inc., today indicates some traders are positioning for shares in the name to continue to drop. The stock yesterday plunged 40% after the company reported a surprise second-quarter loss, forecast a loss for the full year and suspended its quarterly dividend. Shares declined another 2.6% this morning to stand at $6.81 as of 11:35 a.m. ET. Traders expecting the stock may have further to fall in the near term picked up Aug $5.0 strike calls, buying roughly 470 lots for a premium of $0.20 each during the first 10 minutes of the trading day. Buyers of the $5.0 strike calls stand ready to profit at expiration next month should shares in Jakks Pacific tumble 30% from the current price of $6.81 to breach the effective breakeven point on the downside at $4.80.

GAME – Shanda Games Ltd. – Shares in the publisher of online games in China are continuing to move higher today, rising 9.3% to $5.74 in early afternoon trading. The stock is up 40% this week on positive reports from the company regarding a new mobile game. Traders positioning for the stock to continue to hit fresh 52-week highs appear to have purchased several hundred Sep $7.5 strike calls this morning for an average premium of $0.24 per contract. Upwards of 660 of the $7.5 strike calls changed hands during the first half of the session versus open interest of 85 contracts. The bullish strategy may pay off at expiration in September if shares in Shanda Games surge 35% to exceed the average breakeven price of $7.74.

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