Stock Options Watch: DIS, NTE, VLO

By Apr 29, 2013, 1:25 PM Author's Blog  

DIS – Walt Disney Co. – Trading traffic in weekly call options on Disney suggests traders are positioning for shares in the name to extend gains, with the stock up as much as 2.2% at a new all-time high of $63.25 today on the heels of an upgrade to ‘Buy’ from ‘Neutral’ with a target price of $72.00 at UBS. Shares in Disney are up nearly 50% since this time last year. Traders betting the stock pushes to fresh highs this week appear to be buying the May 03 ’13 $65 strike weekly calls. Roughly 400 contracts have changed hands versus open interest of 13 contracts as of 12:30 p.m. ET, and it looks like the bulk of the volume was purchased in the early going for an average premium of $0.07 per contract. Weekly call buyers make money at expiration this week if shares in Disney increase another 2.9% over today’s high of $63.25 to top the average breakeven point at $65.07. Walt Disney Co. reports second-quarter earnings after the closing bell next Tuesday.

NTE – Nam Tai Electronics, Inc. – Buyers of bearish options on electrical components and products provider, Nam Tai Electronics, Inc., last week prior to the company’s first-quarter earnings report ahead of the open this morning are seeing big gains in the value of those contracts, with shares in the name tumbling more than 30% today to the lowest level since August of 2012. Traders last week snapped up front month put options, buying around 1,500 lots at the May $10 strike for an average premium of $0.40 each and roughly 575 puts at the May $12.5 strike at an average premium of $1.48 apiece. The sharp selloff in shares of Nam Tai today now finds the $10 and $12.5 strike put contracts changing hands at $2.40 and $5.00 apiece, respectively, as of 12:15 p.m. in New York. Overall options volume in excess of 12,000 contracts in play on NTE today is substantial versus the stock’s average daily volume of around 800 contracts. Shares in the name are currently down 33% on the day at $7.57.

VLO – Valero Energy Corp. – Shares in Valero Energy Corp. are on the rise today, up 1.7% at $41.42 as of 11:50 a.m. ET ahead of the company’s first-quarter earnings release prior to the opening bell on Tuesday. Big prints in weekly calls on VLO in the early going this morning suggests some traders are positioning for the price of the underlying to extend gains in the near term. The May 03 ’13 $42.5 strike calls are the most active contracts on Valero by volume, with upwards of 5,900 lots in play versus open interest of 80 contracts. Most of the $42.5 calls, including a single print of 4,136 contracts, appear to have been purchased for an average premium of $0.56 apiece. Call buyers stand ready to profit at expiration this week in the event that Valero’s shares rally another 4.0% over the current price of $41.42 to surpass the average breakeven point on the upside at $43.06. The May 03 ’13 $42 strike call options are active as well, with around 600 lots purchased earlier in the session at an average premium of $0.69 each. Shares in Valero are up roughly 70% since this time last year.

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