Stock Options Watch: PMTI, LNKD, STP

PMTI – Palomar Medical Technologies, Inc. – Options on Palomar Medical Technologies are trading more actively than usual on Monday, with volume topping 1,200 lots in the early going versus average daily volume of around 30 contracts and compared to total open interest of 372 contracts. Traders appear to be positioning for shares in the maker of proprietary laser systems for hair removal to rally in the near term, with shares in the name up better than 3.2% this morning at a fresh 52-week high of $11.30. Palomar shares have increased 60% since mid-November 2012. The April $12.5 strike calls attracted the most volume during the first half of the trading session, with upwards of 960 lots in play versus open interest of two contracts. Time and sales data suggests most of the $12.5 strike calls were purchased for an average premium of $0.85 each. Call buyers stand ready to profit at expiration next month should shares in Palomar tack on another 18% to top the average breakeven price of $13.35.

LNKD – LinkedIn Corp. – Shares in LinkedIn are bucking the trend today, increasing as much as 2.2% to hit a fresh record high of $174.25 on Monday morning amid a tepid start to the trading week for U.S. stocks. Traders positioning for shares in the online professional network operator to continue to hit new highs during the next four sessions snapped up weekly calls on the stock today. Buyers stepped in the purchase the Mar. 08 ’13 $175 and $180 strike calls in the early going this morning, paying average premiums of $2.20 and $0.96 apiece for the contracts. Traders long the upside calls may profit at expiration this week in the event that LNKD shares rally another 1.7% and 3.9% to surpass average breakeven prices of $177.20 and $180.96, respectively. Meanwhile, sellers of the Mar. 08 ’13 $175 strike put options are also positioned to benefit from a short-term bullish view on LNKD should shares extend gains this week. Put sellers pocketed an average premium of $4.13 per contract this morning, and keep the full amount as long as shares in LinkedIn top $175.00 at expiration.

STP – Suntech Power Holdings Co., Ltd. – Chinese solar manufacturer, Suntech Power Holdings Co., popped up on our ‘hot by options volume’ market scanner this morning with heavy trading traffic in bearish puts on the stock. Shares in Suntech, down more than 35% year-to-date, declined 5% today to trade at $1.24 by 12:10 p.m. ET. Put buyers are positioning for shares in Suntech to continue to slide in the near term. Upwards of 2,000 contracts changed hands at each of the March $0.5 and $1.0 striking prices this morning, with much of the volume purchased at average premiums of $0.08 and $0.20 each, respectively. Bearish positioning spread to the April $0.50 and $1.0 strikes, as well. Traders picked up around 1,400 of the April $1.0 strike puts at an average premium of $0.30 each, and may profit by expiration next months if shares in Suntech drop more than 40% from the current price to trade below $0.70, a new all-time low. Buyers of the April $0.50 strike puts paid an average premium of $0.12 per contract for roughly 1,200 contracts, with profits kicking in below an average breakeven share price of $0.38 through April expiration.

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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