Stock Options Alert: INTC, HALO, JPM

By Dec 21, 2012, 2:54 PM Author's Blog  

INTCIntel Corp.Shares in the chip maker are in negative territory this morning, trading lower with the broader market on signs budget talks are stalling and lawmakers may not reach a deal by year end. Intel’s shares are down better than 2% to stand at $20.59 as of midday in New York. Fresh interest in weekly call and put options on the name this morning suggests traders are preparing for volatility in the price of the underlying through the end of 2012. Options players bracing for Intel’s shares to potentially fall sharply during the next four trading session snapped up around 1,000 puts at the Dec. 28 ’12 $20 strike and another 550 puts at the Dec. 28 ’12 $19.5 strike at premiums of $0.07 and $0.04 apiece, respectively. Traders long the $20 and $19.5 strike contracts may profit in the event that Intel’s shares drop roughly 3.2% and 5.5% to settle below the effective breakeven prices of $19.93 and $19.46 by expiration next week. Meanwhile, strategists holding out hope that a deal gets done and lifts equities in the near term appear to be purchasing upside calls today. The Dec. 28 ’12 $21 strike calls saw the most volume, with upwards of 5,000 contracts in play during the first half of the session. Time and sales data suggests the bulk of the volume was purchased for an average premium of $0.15 apiece. Buyers of the $21 strike calls profit at expiration as long as Intel’s shares rally 2.7% to settle above $21.15.

HALOHalozyme Therapeutics, Inc.Upside calls on biopharmaceutical company, Halozyme Therapeutics, Inc., are active today, with shares in the name rallying as much as 30% to $7.19 on Friday morning. The stock popped after Halozyme announced it will work with Pfizer to create up to six new injectable drugs. Options traders positioning for HALO’s shares to extend gains during the next four weeks purchased around 250 calls at the Jan. 2013 $7.5 strike for an average premium of $0.37 per contract. Call buyers may profit at expiration next year should shares in the name increase 12% over the current price of $7.03 to surpass the average breakeven point at $7.87. The Mar. 2013 $7.5 strike calls are also active today, with 242 contracts in play as of 12:55 p.m. ET.

JPMJPMorgan Chase & Co.Trading traffic in weekly put options on JPMorgan this morning suggests some strategists are preparing for shares to extend losses during the final four trading sessions of 2012. Shares in JPM are down 1.25%, off their lowest level of the day, to stand at $43.98 as of 1:00 p.m. in New York. The purchase of around 2,100 puts at the Dec. 28 ’12 $41.5 strike for a premium of $0.10 apiece in the early going indicates at least one strategist is bracing for the stock to pullback further. The puts may be profitable at expiration next week should shares in JPMorgan drop 6% to breach the effective breakeven point on the downside at $41.40.

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