Options Activity Alert: VCLK, JPM, MOS

VCLK – ValueClick, Inc. – Options on the digital marketing services company and provider of Internet-based advertising solutions are far more active than usual today, with volume topping 2,500 contracts versus the stock’s average daily option volume of 397 contracts. The bulk of the activity in the name may suggest some investors believe the stock may make a big move to the upside in the near future. ValueClick is scheduled to report second-quarter earnings after the close on July 31st. The stock, which had dropped more than 35% from a 52-week high of $21.85 on May 1st down to $13.80 on June 28th, regained its footing at the end of June after the company said second-quarter revenue and adjusted EBITDA are likely to come in at the upper-end of its forecast range. The stock posted double-digit gains following the company’s positive comments and today trades 0.65% higher at $15.71. Call buying on the name today could pay off for some traders should the Q2 earnings report at the end of the month surprise to the upside. The Aug. $19 strike is the most heavily trafficked today, with more than 2,100 calls in play versus open interest of just 49 contracts. It looks like most of the calls were purchased for an average premium of $0.18 apiece in the first half of the trading session. Upside call buyers may profit in the event that shares in ValueClick jump 22% over the current price of $15.71, to top the average breakeven point at $19.18 by expiration next month.

JPM – JPMorgan Chase & Co. – Shares in JPMorgan are up better than 1.1% this morning at $34.64 as investors await the release of minutes from last month’s Federal Reserve meeting as well as the bank’s second-quarter earnings report on Friday. A sizable call spread initiated in the September expiry appears to be the work of a strategist positioning for shares in the name to stage a recovery rally during the next couple of months. It looks like the options trader purchased 5,000 calls at the Sept. $36 strike for a premium of $1.37 each and sold the same number of calls up at the Sept. $40 strike at a premium of $0.36 apiece. The call spread cost a net premium of $1.01 per contract and positions the trader to make money should shares in JPM rally 6.8% to $37.01 by September expiration. Maximum possible profits available on the spread amount to $2.99 per contract and require a 15.5% move to the upside in the stock price. Shares in JPMorgan last traded above $40.00 in May before reports of billions of dollars in trading losses took the stock down to its lowest since December 2011. The stock is down 25% since reaching a 52-week high of $46.475 on March 27th.

MOS – Mosaic Co. – The fertilizer maker’s shares continue to march higher today, up 1.5% at $55.60 as of midday in New York, adding to the more than 20% move higher in the shares since the first week of June. Substantial fresh interest in call options on Mosaic suggests one or more options traders may be positioning for the price of the underlying to extend gains through September expiration. More than 10,000 calls changed hands at the Sept. $62.5 strike versus open interest of 1,525 contracts. It appears most of the options were purchased for an average premium of $0.93 apiece, while the single-largest print of 4,229 contracts traded in a block to the middle of the market at a premium of $0.97 per contract. Call buyers may profit at expiration in September in the event Mosaic’s shares surge 14% to top the average breakeven point at $63.43, a level the stock price hasn’t seen since September 2011. The potash producer is scheduled to report fourth-quarter earnings ahead of the open next Tuesday.

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.

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