Stock Options Watch: FIO, EXPE, BID

By May 10, 2013, 12:40 PM Author's Blog  

FIO – Fusion-io, Inc. – Shares in the provider of big data storage solutions are in recovery mode on Friday, up 3.3% at $14.70 as of 11:10 a.m. ET, on the heels of a sharp selloff earlier in the week. The stock dropped 27%, the most ever, to a record low of $13.13 on Wednesday after Fusion-io’s CEO, David Flynn, and co-founder, Rick White, resigned. The company issued a press release on Wednesday announcing the management changes, naming former EVP and Chief Strategy and Technology Officer at Hewlett-Packard Co., Shane Robison, Fusion-io’s new Chairman and CEO. Options changing hands on FIO this morning indicates some traders are positioning for shares in the name to continue to recover in the near term. The most actively traded contracts as measured by volume are the Jun $16 strike calls, with volume currently topping 13,000 contracts versus open interest of 2,713 lots. Most of the $16 strike calls appear to have been purchased during the first 30 minutes of the trading session for an average premium of $0.65 each. Buyers of the upside calls stand ready to profit at expiration should shares in FIO rally more than 13% over the current price of $14.70 to surpass the average breakeven point at $16.65.

EXPE – Expedia, Inc. – Options in play on online travel company, Expedia, Inc., today are looking for shares in the name to rally substantially during the next couple of months. The stock, which advanced 3.4% to $57.89 by 11:30 a.m. in New York, is down roughly 15% off a record high of $68.09 achieved back in February. EXPE shares at the current level are still up more than 40% since this time last year. A sizable print in Expedia calls straight out of the gate this morning positions one strategist to benefit from continued gains in the price of the underlying. It looks like the trader purchased 3,000 calls at the July $59.48 strike for a premium of $2.05 per contract. The position starts making money if shares in EXPE rally another 6.0% over the current level to top the average breakeven price of $61.53 at expiration.

BID – Sotheby’s – Shares in auctioneer, Sotheby’s, fell as much as 6.0% to $34.10 on Friday morning after the company reported a wider-than-expected first-quarter loss of $0.33 a share. The stock is well of its lows as of the time of this writing, however, trading down 2.4% on the day at $35.44 as of 11:50 a.m. ET. One or more traders positioning for a near-term recovery in the stock snapped up around 1,200 calls at the May $36 strike within 10 minutes of the opening bell this morning. The calls were picked up for an average premium of $0.42 apiece, and may be profitable at expiration in the event that BID’s shares rally 2.8% to surpass the average breakeven price of $36.42.

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