Option Activity Alert: CMCSA, CSX, WHR, TSN

CMCSA – Comcast Corp. – Bullish traders are piling into call options on Comcast Corp. today after the cable provider received an upgrade to ‘outperform’ from ‘market perform’ with a 12-month target share price of $26.00 at Sanford Bernstein. Shares in Comcast Corp. surged 5.05% to secure an intraday- and new 52-week high of $22.40. Optimism on the cable services company also follows a report in the Wall Street Journal this morning that describes Comcast’s efforts to test a new service that combines TV and the some features of the Internet through a set-top box. Near-term bulls purchased more than 5,910 now in-the-money calls at the December $22 strike for an average premium of $0.36 apiece. Investors holding these contracts are hoping to see Comcast’s shares soar above the average breakeven price of $22.36 through expiration on Friday. More than 7,200 calls changed hands at the December $22 strike versus puny previously existing open interest of just 1,052 contracts. Optimism spread to the January 2011 contract where investors purchased in- and out-of-the-money call options. Traders scooped up more than 2,800 calls up at the January 2011 $22.5 strike at an average premium of $0.46 apiece. Call buyers at this strike are poised to profit should shares in Comcast Corp. climb 2.5% over today’s high of $22.40 to exceed the average breakeven point on the calls at $22.96 ahead of January 2011 expiration. Comcast call and put options were active in the April 2011 contract, as well. It looks like one trader may have unraveled a 2,500-lot three-legged bullish spread this morning. The sharp rise in demand for options on the stock lifted Comcast’s overall reading of options implied volatility 8.8% to 25.26% by 12:55 pm.

CSX – CSX Corp. – The provider of rail-based transportation services popped up on our scanners in the first half of the trading session after a large number of put options changed hands in the January 2011 contract. CSX Corp.’s shares are down slightly by 0.25% in early afternoon trading to stand at $63.63 as of 12:20 pm. Investors fearing the freight transportation firm’s shares may slide lower ahead of expiration day next month picked up approximately 9,000 puts at the January 2011 $62.5 strike for an average premium of $1.65 a-pop. Put buyers are prepared to profit, or realize downside protection on a long position in the underlying, should shares in CSX Corp. drop 4.4% lower to trade below the average breakeven price of $60.85 by January 2011 expiration. More than 16,650 put options have changed hands at the January 2011 $62.5 strike versus previously existing open interest of just 1,841 contracts at that strike. The jump in demand for put options on CSX helped lift the stock’s overall reading of options implied volatility 11.2% to 27.30% by 12:25 pm this afternoon. The company is scheduled to report fourth-quarter earnings after the closing bell on January 18, 2011, which is a few days before the put options are set to expire.

WHR – Whirlpool Corp. – Bullish options players are scooping up in- and out-of-the-money call options on the home appliances manufacturer today in order to position for continued appreciation in the price of the underlying stock. Whirlpool’s shares increased as much as 3.1% this morning to touch an intraday high of $88.27, with the stock currently up 2.35% on the day at $87.60 as of 12:05 pm. Near-term optimists picked up more than 2,200 calls at the December $90 strike for an average premium of $0.63 apiece. Call buyers at this strike are poised to profit should WHR shares rally another 3.45% over the current price of $87.60 to surpass the average breakeven point to the upside at $90.63 ahead of expiration on Friday. Trading traffic in Whirlpool Corp. calls is more congested in the January 2011 contract. It looks like investors purchased some 2,000 in-the-money calls at the January 2011 $85 strike for an average premium of $5.82 each, and picked up another 2,000 calls at the higher January 2011 $90 strike at an average premium of $3.51 apiece. One options player appears to have taken profits off the table today by selling 2,000 deep-in-the-money calls at the January 2011 $80 strike for a premium of $8.70 a-pop. The investor likely purchased these 2,000 contracts for a premium of $2.59 each back on December 1, 2010, when Whirlpool’s shares were trading around $74.91. The sale of the contracts for $8.70 yields net profits of $6.11 per contract to the investor. More than 19,300 option contracts have changed hands on the home appliance maker as of 12:15 pm in New York. Investors are exchanging more than 4.2 calls on the stock for each single put option in play thus far in the session.

TSN – Tyson Foods, Inc. – Put sellers flocked to Tyson Foods this morning with shares of the processor and marketer of chicken, beef, and pork trading higher by 0.75% to stand at $17.24 by 11:15 am in New York. It looks like investors are either ditching downside protection by selling-to-close previously established long put positions, or selling the put options outright to pocket available premium on the contracts. The activity in January 2011 contract puts today may represent a change of heart by former bears or fresh optimism on the food processor through expiration day next month. One trader sold 11,000 puts at the January 2011 $16 strike for a premium of $0.25 apiece. The put seller receives $0.25 in premium per contract, and keeps the full amount of premium as long as Tyson’s shares trade above $16.00 through expiration day. The short stance in puts indicates the investor is willing to have shares put to him at an effective price of $15.75 should the put options land in-the-money at expiration. Another chunk of 8,000 puts sold at the lower January 2011 $15 strike for a premium of $0.10 each, suggesting the trader responsible for the transaction sees shares trading higher than $15.00 through expiration in January.

About Andrew Wilkinson 1023 Articles

Affiliation: Interactive Brokers

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.

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.

Visit: Interactive Brokers

Be the first to comment

Leave a Reply

Your email address will not be published.