YELP – Yelp, Inc. – Shares in Yelp are screaming higher today, up 26.5% at an all-time high of $32.00 as of 11:35 a.m. ET, after the provider of online consumer reviews of local businesses posted first-quarter sales that handily beat analyst estimates. Double-digit percentage gains in the price of the underlying shares sparked heavy trading in Yelp options on Thursday morning, with volume currently up above 11,000 contracts versus the stock’s average daily volume of around 1,300 contracts. In and out-of-the-money call buying on Yelp today indicates some traders are positioning for the price of the underlying to extend gains in the near term. Bullish traders snapped up calls at the May $30, $31 and $32 strikes this morning, driving volume at each strike well above existing open interest levels. More than 800 calls changed hands at the May $32 strike versus open interest of 46 contracts. The bulk of the contracts appear to have been purchased within the first 10 minutes of the opening bell for a premium of $0.40 each. Sharp intraday gains in Yelp’s shares now find the $32 calls trading at $1.35 each, tripling the value of one or more traders’ positions by lunchtime. Meanwhile, upside calls in play out in the August expiry look for shares in Yelp to rally substantially this summer. Bulls betting on the big move purchased around 425 calls at the Aug. $35 strike for an average premium of $1.95 each. Traders long the calls make money at expiration if the price of the underlying jumps 15% over the current price of $32.00 to top the average breakeven point at $36.95.
MGM – MGM Resorts International – Resort casino operator, MGM Resorts International, reported a surprise first-quarter profit ahead of the opening bell this morning, sending shares in the name up 8.0% to a new 52-week high of $14.90 by midday in New York. Bullish options looking for shares to extend gains in the near term are active today, with calls expiring next week attracting substantial fresh interest. Traders exchanged upwards of 7,000 calls at the May 10 ’13 $15 strike during the first half of the session, and appear to have purchased most of the volume for an average premium of $0.25 per contract. Buyers of the weekly contracts profit at expiration next week if shares in the largest casino operator on the Las Vegas Strip rally more than 2.0% to exceed the breakeven price of $15.25.
DD – E.I. du Pont de Nemours & Co. – A sizable bear put spread initiated on DuPont during morning trading braces for shares in the name to potentially pull back sharply during the next seven weeks. The stock is up 1.1% at $53.97 as of 12:15 p.m. ET, the afternoon of the company’s Investor Day, which began at 9:00 a.m. ET this morning in Wilmington, Delaware. The 5,000-lot Jun $47/$52.5 put spread was purchased just after 10:00 a.m. ET today at a net premium outlay of $1.23 per contract. The spread makes money if shares in DuPont decline 5.0% from the current level to breach the effective breakeven price of $51.27, with maximum potential profits of $4.27 per contract available on the position in the event that shares drop 13% to $47.00 by June expiration. Shares in DuPont last traded below $47.00 at the end of February.