Stock Options Watch: IACI, LNKD, MCP

MCPMolycorp, Inc.Shares in rare earth metals mining company, Molycorp, Inc., are reeling Thursday morning after the Greenwood Village, Colorado-based company missed its 2012 production target and lowered its 2013 revenue and cash estimates. The stock is currently down 24% on the day to stand at $8.20 as of 11:00 a.m. ET. Analysts at JPMorgan cut their price target on the stock to $5.00 from $8.00 today. Options traders positioning for shares to weaken further by the end of this week initiated bearish plays in weekly put contracts. Put volume is on the rise at the Jan 11 ’13 $9.0, $8.5 and $8.0 striking prices this morning. Traders appear to have purchased around 1,100 in-the-money puts at the $9.0 strike, and another 2,350 lots at the $8.5 strike in the early going. The $8.0 strike puts have traded upwards of 2,200 times thus far today versus zero previously opened positions, with the bulk of the contracts purchased for an average premium of $0.13 apiece. Traders long the Jan. 11 ’13 $8.0 strike puts stand ready to profit at expiration this week should Molycorp’s shares decline another 4% from the current price of $8.20 to breach the average breakeven point at $7.87. MCP shares, down more than 70% since January 2012, last traded below $7.87 on November 23rd.

IACI – InterActiveCorp – Options activity on media and Internet company, InterActiveCorp, this morning indicates one trader is preparing for shares in the name to potentially decline in the near term, perhaps following the company’s fourth-quarter earnings report in February. Shares in the operator of online dating websites, match.com and okcupid, are down more than 3% today at $43.99 as of 11:15 a.m. in New York. The single-largest transaction in IACI options this morning was the purchase of 1,500-lot Feb. $40/$45 put spread for a net premium of $1.55 each. The bearish spread makes money if shares in InterActiveCorp slip 1.2% from the current level to trade below the breakeven price of $43.45. Maximum potential profits of $3.45 are available at expiration next month in the event that shares in the media company drop 9% to a new 52-week low of $40.00.

LNKDLinkedIn Corp.Shares in online professional network operator, LinkedIn Corp., are rallying Thursday after the company announced yesterday it has reached 200 million members. The milestone marks an increase of more than 13 million members since its last announcement on November 1, 2012, according to a statement on the company’s website. LinkedIn shares jumped 5% to an intraday high of $119.37 at the start of the session after the stock was rated new ‘outperform’ with a price target of $133.00 at CLSA. Options traders snapping up weekly call options on LNKD this morning are positioned to profit should the price of the underlying extend gains in the near term. The Jan. 11 ’13 $120 strike calls are the most active of the weekly contracts with one full trading session remaining to expiration. Upwards of 2,500 $120 strike calls changed hands before midday on the East Coast, and it appears most of the contracts were purchased for an average premium of $0.49 each. Call buyers stand ready to profit at expiration this week should shares in LinkedIn rally above the average breakeven point at $120.49. Bullish positioning on the stock spread to the Jan. 18 ’13 $125 strike, where roughly 400 calls were purchased for an average premium of $0.31 apiece. Traders long the $125 strike calls that expire next week may profit in the event that shares rally another 5% to surpass $125.31. Shares in the name last traded above $125.31 in mid-September 2012 when the stock reached an all-time high of $125.50 on an intraday basis.

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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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