Stock Options Watch: INTC, PGNX, RAD

INTC – Intel Corp. – Trading traffic in weekly call and put options on Intel Corp. this morning is mixed, with some positions looking for shares to move higher during the next five sessions, while others brace for the stock to head lower from here. Shares in the chip giant are down 1.25% on Friday to stand at $21.38 as of midday in New York. The most actively traded Mar. 22 ’13 expiry options as measured by volume are the $21 strike puts, as of the time of this writing, with volume in excess of 8,600 lots versus open interest of 20 contracts. It looks like most of the $21 weekly puts were purchased at an average premium of $0.10 apiece, thus positioning buyers to profit in the event that INTC shares decline 2.2% from the current price of $21.38 to breach the effective breakeven point on the downside at $20.90 by expiration. Meanwhile, traders itching for a rally in Intel’s shares next week snapped up call options across several striking prices. The Mar. 22 ’13 $21.5 strike calls are seeing the most volume, with 1,400 lots traded against open interest of 578 contracts. The bulk of the $21.5 strike calls appear to have been purchased at an average premium of $0.18 each. Traders long the calls stand ready to profit at expiration should shares in INTC increase 1.4% to top the average breakeven price of $21.68.

PGNX – Progenics Pharmaceuticals, Inc. – Shares in biotechnology company, Progenics Pharmaceuticals, are soaring on Friday, trading up more than 45% to touch a seven-month high of $4.94 in the early going after the company reported a narrower-than-expected fourth-quarter loss ahead of the opening bell. PGNX popped up on our ‘hot by options volume’ market scanner due to heavy trading in the May expiry puts. The most active contracts are the May $4.0 strike puts, with more than 5,100 lots in play versus open interest of 8 contracts. Volume in the $4.0 strike puts alone is more than six times the total open interest in Progenics of 839 options contracts. It looks like the puts were sold this morning for a premium of $0.35 apiece. The put seller keeps the full amount of premium as long as shares in PGNX exceed $4.00 at May expiration, but may lose money on the position if shares settle below $3.65 at expiration in nine weeks.

RAD – Rite Aid Corp. – Upside call options on drugstore chain operator, Rite Aid Corp., are active for a second consecutive session, with shares in the name flat on the day at $1.86 just before 11:30 a.m. ET. The stock kicked off the final trading day of the week in positive territory, rallying up to $1.92 a share, the highest level in nearly one year. Traders are again focusing in on the April $2.0 strike calls, with upwards of 12,500 lots in play versus open interest of 29,356 contracts. Sizeable trades initiated at the $2.0 striking price on Thursday morning drove open interest up by more than 20,000 contracts overnight. Most of the opening positions on Thursday appeared to have been purchased at a premium of $0.15 per contract. Time and sales data from today’s activity suggests traders purchased most of the contracts at a premium of $0.15 each during the first 10 minutes of the session. Rite Aid reports fourth-quarter earnings on April 11th.

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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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