WFR – MEMC Electronic Materials Inc. – Investors piled into near-term in- and out-of-the-money call options on the maker of solar wafers in the first hours of the trading session as shares rallied 4.7% to touch an intraday high of $11.08. Shares tapered off slightly in morning trading to stand 3.5% higher on the day at $10.95 just before 10:45 am (ET). Call coveters picked up 1,200 deep in-the-money contracts at the June $9.0 strike for an average premium of $1.88 each, thus establishing an average breakeven price of $10.88. Buying interest spread to the higher June $11 strike where at least 2,700 calls were purchased at an average premium of $0.58 apiece. Investors long the June $11 strike calls make money as long as WFR’s shares rally another 5.75% over the current price of $10.95 to exceed the average breakeven point to the upside at $11.58 by June expiration day. Finally, bulls bought approximately 3,800 call options at the June $12 strike by shelling out an average premium of $0.27 per contract. MEMC Electronic Materials’ shares must add 12.05% ahead of June expiration in order for higher-strike call purchasers to make money above the average breakeven price of $12.27. The demand for call options on the stock lifted WFR’s overall reading of options implied volatility 6.7% to 68.83% as of 10:50 am (ET).
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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