Stock Options Watch: DIS, VMED, MS

DIS – Walt Disney Co. – Front month call options changing hands on Disney today suggest some traders are positioning for shares in the name to break well above recent all-time highs in the near future. The stock, up some 50% since this time last year, increased 0.45% near the open this morning to touch a record high of $65.09 after Iron Man 3, produced by Marvel Studios, a division of the Walt Disney Co., earned more than $175 million in its opening weekend in North America. Traders betting the stock pushes to fresh highs snapped up roughly 2,800 calls at the May $67.5 strike for an average premium of $0.48 apiece during the first half of the session. Call buyers make money at expiration if shares in Disney surge 4.4% over today’s high of $65.09 to top the average breakeven point at $67.98. Walt Disney Co. reports second-quarter earnings after the closing bell tomorrow.

VMED – Virgin Media, Inc. – Big prints in Virgin Media put options on Monday morning indicates at least one trader is bracing for shares in the name to potentially pull back off recent record highs. Shares in Virgin earlier today rallied 0.40% to touch a fresh all-time high of $50.31. The stock has more than doubled since this time last year and is up roughly 1600% since touching down at a 2008 financial-crisis low of $2.96. The May $50 strike put contracts traded approximately 5,000 times by midday in New York versus open interest of just 15 contracts. It looks like most of the volume was purchased at a premium of $0.55 each, thus positioning buyers to profit in the event that VMED’s shares slip 1.7% from today’s high of $50.31 to breach the effective breakeven point on the downside at $49.45 by expiration next week.

MS – Morgan Stanley – Shares in Morgan Stanley are on the rise today, up 2.5% at $23.33 as of 1:10 p.m. ET. Trading traffic in weekly calls on MS are betting the stock extend gains during the next four sessions. The May 10 ’13 $23.5 and $24.5 strike calls attracted the most volume, with more than 2,000 contracts changing hands at each strike during morning trading. Time and sales data suggests traders purchased around 2,100 of the $23.5 strike weekly calls for an average premium of $0.28 per contract, and paid roughly $0.02 apiece for roughly the same number of calls at the higher $24.5 strike. Call buyers stand ready to profit at expiration in the event that Morgan Stanley’s shares rally 1.9% and 5.1% to top average breakeven prices at $23.78 and $24.52, respectively. Buyers of around 1,100 of the May 10 ’13 $23 strike calls on Friday paid an average premium of $0.34 per contract, and today find the value of the options has climbed more than 50% to $0.54 per contract as of the time of this writing.

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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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