Stock Options Watch: NWSA, IYR, CTRP

NWSA – News Corporation – Trading traffic in News Corp call options in the early going on Thursday indicate some traders are positioning for the price of the underlying to continue marching to fresh record highs in the near term. The stock today increased as much as 6.8%, hitting a new all-time high of $34.04 after the global media company reported third-quarter net income that topped average analyst estimates. Traders looking for the up-trend to extend into next week snapped up front month calls, picking up around 200 calls at the May $34 strike at a premium of $0.25 each, and buying roughly 500 calls at the May $35 strike for an average premium of $0.15 per contract. Call buyers stand ready to profit at expiration next week should shares in News Corp rally another 3.8% and 6.5% over the current price of $33.00 to surpass average breakeven points at $34.25 and $35.15, respectively. Shares in News Corp, which plans to split into two companies, are up roughly 65% since this time last year.

IYR – iShares Dow Jones U.S. Real Estate Index ETF – Shares in the IYR, an ETF that provides exposure to U.S. real estate stocks and REITs, slipped 0.40% today to $73.90, after earlier this week trading up to a record high of $74.31 on the heels of a more than 15% rally since this time last year. The fund popped up on our ‘most active by options volume’ market scanner during the first half hour of the session following a large trade in the June expiry put options. It looks like one strategist purchased a block of 25,000 puts at the Jun $72 strike for a premium of $0.55 apiece. The trade makes money if shares in the IYR decline more than 3.0% from the current level to trade below the effective breakeven price of $71.45 by June expiration. The Jun $72 strike puts were active last week as well, with roughly 10,000 contracts purchased last Wednesday for an average premium of $0.84 each. Heavy volume in IYR puts this morning pushed the put/call ratio on the ETF to 36 during the first half of the session.

CTRP – International, Ltd. – The provider of hotel accommodations, airline tickets, packaged tours and other travel services in China reported first-quarter earnings and sales that handily beat average analyst expectations after the closing bell on Wednesday, sending shares in the International up more than 25% to a new 52-week high of $29.81 on Thursday. Options in play on CTRP straight out of the gate this morning suggest some traders are initiating bullish positions on the name following earnings. More than 700 in-the-money calls have changed hands at the May $28 strike against open interest of 171 contracts. Premium on these contracts is up sharply since this morning, with the $28 calls commanding an asking price of $1.90 apiece as of midday, up four-fold from $0.45 per contract in the early going. Bulls also looked to the June expiry calls this morning, picking up around 350 lots at the Jun $28 strike for an average premium of $0.89 each and another 300 lots at the higher Jun $30 strike at a premium of $0.70 per contract. Overall options volume on is up sharply today, with more than 10,500 contracts in play versus average daily volume of around 2,500 contracts.

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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