INTC – Intel Corp. – Put options purchased on Intel during the final 30 minutes of trading last week have since roughly tripled in value, with shares in the chipmaker down 3.5% at $23.22 on Monday morning. The stock was cut to ‘Underweight’ from ‘Equal-weight’ with a 12-month target price of $20.00 at Evercore Partners this morning. The largest increase in open interest in weekly options on INTC was in the Jul 12 ’13 $23.5 strike puts. Time and sales data indicates more than 4,400 of the $23.5 strike put options were purchased for an average premium of $0.13 apiece on Friday afternoon. The contracts are now changing hands at more than three times that level, with the last-traded price on the contracts at $0.43 each just before midday in New York. Today, some traders appear to be bracing for further weakness in the price of the underlying, buying around 800 of the Jul 12 ’13 $23 strike puts for an average premium of $0.15 each, and picking up around 500 of the $22.5 strike weekly put contracts at an average premium of $0.05 apiece. Intel reports second-quarter earnings next Wednesday.
LEG – Leggett & Platt, Inc. – The diversified U.S. manufacturer of components in residential and office furniture, among other products, appeared on our ‘hot by options volume’ market scanner this morning due to a sizable trade in August expiry puts. Shares in Leggett & Platt are down 0.30% at $31.18 as of 12:25 p.m. ET. The largest transaction in LEG options thus far in the session suggests one trader is bracing for shares in the name to pullback during the next five weeks. It looks like the options player purchased 1,000 puts at the Aug $30 strike for a premium of $0.55 apiece. The trade, which may represent an outright bearish bet on the stock or a hedge to protect a long position in the underlying, starts making money if shares in the name decline 5.5% from the current price of $31.18 to trade below the effective breakeven point at $29.45 by August expiration. Leggett & Platt is scheduled to report second-quarter earnings after the closing bell on July 25th.
ALKS – Alkermes Plc – Trading in Alkermes put options this morning indicates one trader is preparing for shares in the biopharmaceutical company to decline in the near term. Shares in Dublin, Ireland-based Alkermes are off 3.3% to stand at $28.24 as of 12:10 p.m. ET. The most actively traded contracts on ALKS by volume are the Jul $28 strike puts, with roughly 2,000 lots purchased at a premium of $0.74 apiece during the first half hour of the trading week. The put buyer makes money at expiration in the event that ALKS shares decline another 3.5% to breach the breakeven point on the downside at $27.26.