SEH – Spartech Corp. – The manufacturer of sheet, rollstock products and custom-designed plastic packages popped up on our ‘hot by options volume’ market scanner this morning due to bullish activity in long-dated put options. Spartech’s shares increased as much as 8.3% earlier in the session to touch an intraday high of $8.57. Today’s high of $8.57 marks a 41.4% rebound in the price of the underlying stock since September 9, 2010, when shares fell to a 52-week low of $6.06 on disappointing third-quarter losses of $3.9 million. Spartech shares still have a long way to go because the intraday high of $8.57 is 44.9% below the stock’s 52-week high of $15.55, attained back on May 3, 2010. Bullish options players hoping to see the rebound in Spartech’s shares continue shed 1,000 puts at the February 2011 $7.5 strike to take in an average premium of $0.62 each. Put sellers keep the full premium received as long as SEH shares exceed $7.50 through expiration day. Optimism spread to the May 2011 $7.5 strike where another 1,200 puts were sold for an average premium of $0.99 apiece. Investors selling put options are apparently happy to have shares of the underlying stock put to them at an effective price of $6.88 and $6.51, respectively, should the puts land in-the-money at expiration. The overall reading of options implied volatility on Spartech Corp. dropped 13.2% to 43.51% as of 11:50 am ET.
Affiliation: Interactive Brokers
Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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