Option Activity Alert: Ford Motor, Monster Worldwide, Bank of New York

F – Ford Motor Co. – One big bullish options player appears to be positioning for Ford’s shares to touch a new 52-week high by November expiration. The automaker’s shares are up 2.25% at $13.95 as of 12:55 p.m. this afternoon, but earlier increased as much as 2.70% to touch an intraday high of $14.01. It looks like the investor upped bullish expectations on the car manufacturer by rolling a sizable long call position to a higher strike price in the November contract. The trader appears to have originally purchased approximately 33,000 calls at November $14 strike for an average premium of $0.56 each back on October 11, 2010. Today he sold the calls at a slightly greater premium of $0.58 apiece in order to purchase 32,500 calls at the higher November $15 strike at a premium of $0.22 per contract. The investor starts to make money on the new batch of calls purchased today if Ford’s shares surge 9.10% over the current price of $13.95 to exceed the effective breakeven point at $15.22 by November expiration. Ford Motor Co. earlier reported that sales in the main 19 European markets declined 16% last month, which represents the firm’s weakest September auto sales reading since 1998. Options implied volatility on the automaker is up 3.1% at 35.17% as of 1:05 p.m. in New York.

MWW – Monster Worldwide, Inc. – The provider of global online employment technology that connects employers with job seekers popped up on our ‘hot by options volume’ market scanner this morning due to bullish activity in November contract call options. Shares in Monster Worldwide rallied as much as 0.42% earlier in the session to touch an intraday high of $13.75, but have since reversed course and are flat on the day to stand at $13.20 as of 11:40 a.m. in New York. Investors hoping to see Monster’s shares rise ahead of expiration day next month purchased approximately 2,100 calls at the November $14 strike for an average premium of $0.61 each. Call buyers make money if the price of the underlying stock jumps 10.7% over the current price of $13.20 to surpass the average breakeven point at $14.61 by November expiration. Optimism spread to the higher November $15 strike where some 2,000 calls were picked up at an average premium of $0.33 each. Investors holding these contracts profit if MWW’s shares surge 16.1% and trade above the average breakeven price of $15.33 by expiration day. Monster Worldwide is scheduled to report third-quarter earnings ahead of the opening bell on October 28, 2010. Investors initiating bullish stances on the stock are well-positioned to benefit from share price appreciation should the firm’s earnings report beat expectations. The demand for calls on the stock helped lift MWW’s overall reading of options implied volatility 9.6% to 50.06% as of 11:50 a.m.

BK – Bank of New York Mellon Corp. – Bearish players positioning for shares in Bank of New York Mellon to slide lower ahead of expiration next month picked up November contract put options this morning. BK’s shares fell 1.45% to $26.25 by 11:50 a.m. The firm reveals how it performed in the third-quarter before the market opens on October 19, 2010. Investors scooped up roughly 3,875 puts at the November $25 strike for an average premium of $0.53 a-pop. Put buyers are prepared to make money should shares decline 6.8% to breach the average breakeven point on the downside at $24.47 by November expiration. Approximately 4,800 puts changed hands today at the November $25 strike versus previously existing open interest of just 708 contracts at that strike. Options implied volatility on the stock is up 5.5% to 30.18% just before 12:00 p.m. in New York trading.

About Andrew Wilkinson 1023 Articles

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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