Stock Options Watch: OKE, STX, SPR

OKE – ONEOK, Inc. – Shares in ONEOK are ripping higher on Thursday, rallying as much as 22% to a near three-month high of $52.32 during morning trading after the company said it plans to spinoff its natural gas distribution business. Options activity on OKE this morning suggests some traders may be taking profits given the strong move in the shares today. Call open interest in the August expiry options is greatest at the $45 strike, with 5,280 open contracts. A review of time and sales data for the Aug $45 calls indicates most of the contracts were likely purchased for an average premium of $0.525 each the morning of July 8th when shares in OKE were hovering around $39.63. The sharp move in the price of the underlying today pushed premium on the Aug $45 strike calls up to as high as $6.80 during the first half of the session. Upwards of 4,500 of the $45 calls have changed hands today, with the bulk of the volume sold for an average premium of $4.59 each, or roughly nine times as much as the $0.525 average premium paid earlier this month. Meanwhile, options traders positioning for shares in the name to extend gains in the near term snapped up around 1,000 calls at each of the Aug $50 and $55 strikes for average premiums of $1.83 and $0.85 each, respectively. ONEOK is scheduled to report second-quarter earnings after the close on July 30th. Shares in ONEOK are currently off their highest level of the session, but continue to stand up 18.5% on the day at $50.75 as of 12:20 p.m. ET.

STX – Seagate Technology Plc – Options changing hands on Seagate Technology today suggest some traders may be positioning for a near-term rebound in the price of the underlying, with the stock down 4.2% this afternoon at $42.34 as of 12:30 p.m. ET, and off roughly 10% since the start of the week. The stock was hit hard mid-week following the company’s fourth-quarter earnings report, though shares have recovered off of their lowest levels. Traders looking for the price of the underlying to continue to recover ahead of the weekend snapped up weekly calls on the stock. More than 4,800 of the Jul 26 ’13 $42.5 strike calls traded this morning against open interest of 307 contracts. It looks like most of the volume was purchased for an average premium of $0.30 apiece, thus positioning buyers to profit at expiration should shares top the average breakeven price of $42.80. Roughly 2,000 of the Jul 26 ’13 $43 strike calls appear to have been purchased for an average premium of $0.13 each, while roughly 900 of the $43.5 strike weekly calls were picked up at an average premium of $0.12 each. Overall options volume on Seagate, currently approaching 38,000 contracts in early afternoon trading, is more than twice the stock’s average daily volume of around 15,000 contracts.

SPR – Spirit AeroSystems Holdings, Inc. – Shares in Spirit AeroSystems are moving higher today, up as much as 11% this morning to $26.71, on speculation GKN Plc may make a $5 billion bid to takeover the aerospace supplier. The chatter sparked heavier than usual trading traffic in Spirit’s options, with volume topping 3,750 contracts during the first half of the trading session versus the stock’s average daily volume of around 650 contracts. Some traders appear to be preparing for shares to extend gains, with more than 900 Aug $25 strike calls purchased for an average premium of $2.14 apiece today. The bullish options make money at expiration next month in the event that Spirit’s shares rally 5.4% over the current price of $25.76 to exceed the average breakeven point at $27.14.

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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