Options Activity Alert: YHOO, HERO, JBL

JBL – Jabil Circuit, Inc. – Shares in Jabil Circuit are down sharply on Thursday, off 4.7% at $18.57 just after midday on the East Coast, following the company’s second-quarter earnings report released after the close on Wednesday. Options activity on JBL today suggests some traders are positioning for shares in the name to rebound in the near term. The most active contracts on Jabil as measured by volume are the April $19 strike calls, with upwards of 3,000 lots in play versus open interest of 1,714 contracts. It looks like most of the calls were purchased for an average premium of $0.40 apiece, and may be profitable at expiration next month should shares in JBL rally 4.5% to settle above the average breakeven point at $19.40. The stock is down nearly 30% since this time last year, but has managed to rally 10% off a 52-week low of $16.89 set back in October.

HERO – Hero Offshore, Inc. – Trading traffic in HERO call options on Thursday indicates some traders are looking for shares in the provider of offshore drilling services to extend gains during the next few months. The stock, up more than 150% since June of 2012, trades 1.65% higher this afternoon at $7.38 as of 1:00 p.m. ET. Traders looking for the price of the underlying to push higher purchased around 3,100 calls at the May $8.0 strike for an average premium of $0.37 apiece during the first half of the session. Call buyers may profit at expiration in May in the event that HERO’s shares rally another X% over the current price of $7.37 to exceed the average breakeven point at $8.37. The May $8.0 strike calls were active on Wednesday, as well. Open interest in the $8.0 strike calls jumped to 3,528 contracts following the prior trading session, with much of the fresh interest purchased at a premium of $0.25 each. Overall volume in HERO options is greater than 5,700 contracts this afternoon, versus the stock’s average daily options volume of around 500 contracts with the call-to-put ratio hovering around 25-to-1, as of the time of this writing.

YHOO – Yahoo! Inc. – Shares in Yahoo are bucking the trend today, up 3.0% at $22.75 as of 11:20 a.m. ET, after the stock was raised to ‘Outperform’ from ‘Perform’ with a target price of $27.00 at Oppenheimer. Options traders looking for shares to continue higher in the near term snapped up weekly calls on the stock this morning, purchasing more than 2,600 lots at the Mar. 22 ’13 $23 strike for an average premium of $0.11 apiece. Traders long the $23 strike call options may profit at expiration this week if shares in Yahoo rally another 1.6% to surpass an average breakeven price and new 52-week high of $23.11. Bullish positions are also taking shape in newly issued weekly options, with fresh interest rising in the Mar. 28 ’13 $22.5 and $23 strike contracts. It looks like traders purchased more than 250 calls at each strike for average premiums of $0.47 and $0.18 apiece, respectively.

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.

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