EBAY – eBay, Inc. – At least one bullish options strategist is positioning for a rally in eBay’s shares ahead of the company’s first-quarter earnings report after the final bell on Wednesday. Shares in the operator of online marketplaces increased as much as 3.1% during the first half of the session to secure an intraday high of $32.94. It looks like one or more investors initiated debit call spreads, buying around 2,000 calls at the June $34 strike for an average premium of $1.04 per contract, and selling roughly 2,000 calls up at the June $36 strike at an average premium of $0.44 apiece. The average net cost of buying the spread amounts to $0.60 per contract. Thus, investors employing call spreads start making money in the event that eBay’s shares rally another 5.0% over today’s high of $32.94 to surpass the average breakeven price of $34.60 by expiration day in June. Maximum potential profits of $1.40 per contract are available on the position if the price of the underlying stock jumps 9.3% to exceed $36.00 at expiration. EBAY’s shares secured a 52-week high of $35.35 back on February 17, 2011.
NTAP – NetApp, Inc. – The provider of enterprise storage and data management software and hardware products and services appeared on our scanners today after sizable prints popped up in long-dated call and put options. Shares in NetApp are currently up 2.1% at $52.10 just after 11:45am. The stock was upgraded to ‘Outperform’ from ‘Sector Perform’ with a 12-month target share price of $64.00 at Pacific Crest this morning. Activity in NetApp LEAPS indicates one options player expects the price of the underlying to improve going forward. It looks like the trader initiated a bullish risk reversal, selling approximately 5,500 puts at the January 2013 $45 strike at an average premium of $5.74 each, in order to purchase around the same number of calls up at the January 2013 $55 strike for an average premium of $8.09 apiece. Net premium paid to initiate the transaction amounts to $2.35 per contract. The investor responsible for the bullish play is poised to profit should shares in the Sunnyvale, CA-based company jump 10.1% over the current price of $52.10 to surpass the average breakeven point to the upside at $57.35 by expiration day in January 2013. Shares in NetApp last exceeded $57.35 back in mid-February. Scant open interest levels at each of the strikes mentioned indicate the spread is an opening position. Options implied volatility on the stock rose 5.6% to 31.87% by 12:00pm.
GT – Goodyear Tire & Rubber Co., Inc. – Investors initiated bullish positions in Goodyear Tire & Rubber Co. call options this morning, with shares in the tire manufacturer rallying as much as 2.0% to an intraday- and new 52-week high of $16.28. Options players may be positioning for shares in the name to move following the company’s first-quarter earnings report ahead of the opening bell on Friday. Nearly all of the activity in Goodyear’s options today involved out-of-the-money calls in the front month. More than 12,800 calls changed hands at the May $17 strike on previously existing open interest of just 950 contracts. The majority of the calls appear to have been purchased for an average premium of $0.40 a-pop. Call buyers profit if shares in the rubber company surge 6.9% over today’s high of $16.28 to surpass the average breakeven price of $17.40 by expiration day in May. Goodyear’s shares last traded above $17.40 back in October 2009. The sharp rise in demand for call options on the stock helped lift GT’s overall reading of options implied volatility 12.9% to 45.99% by 11:40am in New York.
BONT – Bon-Ton Stores, Inc. – Shares in the department store operator dropped 3.0% during the first half of the trading session to touch an intraday low of $13.29. Despite the dip in the price of the underlying, it looks like one options trader may be taking a bullish stance on the stock in the October contract. More than 6,400 call options changed hands at the October $15 strike on paltry previously existing open interest of just 5 contracts. Nearly all of the calls traded on the offer, suggesting the contracts were purchased at a premium of $1.70 apiece. The investor responsible for the transaction stands ready to accrue profits should shares in Bon-Ton Stores soar 25.7% higher during the next six months to surpass the effective breakeven price of $16.70 by expiration day in October. Bon-Ton’s shares closed above $16.70 as recently as March 9, 2011. The department store operator is scheduled to report first-quarter earnings before the market opens on May 19, 2011.