Stock Options Watch: DMND, XLB, CLDX

DMND – Diamond Foods, Inc. – Bullish options in play on the maker of Pop Secret® popcorn and other packaged consumer food products look for shares in Diamond Foods to rally in the near term. Shares in DMND are up 2.8% at $16.70 as of 12:45 p.m. ET, moving higher ahead of the company’s third-quarter earnings report after the closing bell. The stock is off its 2013 high of $17.99 reached back in March, but is still at a more than 20% premium to where the shares closed on December 31st of last year. Despite the recent rally in the stock, shares in the name are still down more than 80% since September of 2011. Traders positioning for shares to rally snapped up Jun $17 strike calls straight out of the gate this morning, picking up around 3,000 contracts for an average premium of $0.65 apiece. Call buyers may profit at expiration should the price of the underlying rise 5.6% over the current price of $16.70 to top the average breakeven point at $17.65.

XLB – Materials Select Sector SPDR ETF – Shares in the XLB are up 0.55% at $40.38 on Monday afternoon, rebounding somewhat after last week touching down to the lowest level since May 2nd. Options changing hands on the Materials Select Sector SPDR ETF early in the session suggest some traders are positioning for the price of the underlying to decline during the next few months. Upwards of 10,000 puts traded at the Sep $40 strike versus open interest of 3,942 contracts this morning, with much of the volume purchased for an average premium of $1.67 each. The largest print was the purchase of a block of 6,000 of the $40 puts at a premium of $1.68 per contract. Put buyers stand ready to profit at September expiration should the price of the underlying fund decline 5.0% from the current level to trade below the breakeven point on the downside at $38.33.

CLDX – Celldex Therapeutics, Inc.– Options on Celldex Therapeutics are active today, with shares in the name rising sharply for a second-consecutive session. Shares in CLDX increased as much as 7.8% to a new 52-week high of $15.71 on Monday morning, adding to the 7.0% upside move realized during Friday’s session. The maker of drug candidates for the treatment of cancer and other diseases presented at the Jefferies 2013 Global Healthcare Conference in New York City on Friday. A sizable print in front month put options on Celldex in the early going today suggests one trader expects the stock to hold above the $14.00 level through June expiration. It looks like the options player sold a block of 3,000 calls at the Jun $14 strike to pocket premium of $0.17 per contract. The put seller walks away with the full amount of premium as long as shares in Celldex settle above $14.00 and the options expire worthless at the end of next week.

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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