Options Activity Alert: RL, ALNY, SFD

RL – Ralph Lauren Corp. – A spate of call buying initiated in retailer, Ralph Lauren Corp., in the first hour of the trading session this morning suggests one or more traders are positioning for a short-term bounce in the price of the underlying shares. The stock opened Monday in negative territory following the release of weaker-than-expected retail sales data, but has since recovered to stand 0.35% higher on the day at $141.48 as of 12:40 p.m. in New York. Ralph Lauren options are most active at the July $145 strike where upwards of 5,900 calls changed hands against open interest of just 461 contracts. It looks like most of the calls were purchased for an average premium of $0.40 apiece, including a block of 3,337 calls; the single-largest print in RL options so far today. The contracts may be profitable at expiration in the event Ralph Lauren shares tack on 2.8% to top the breakeven price of $145.40.

ALNY – Alnylam Pharmaceuticals, Inc. – Shares in Alnylam surged 40% to a two-year high of $17.54 today after the biotechnology company announced positive clinical data from a Phase I trial with ALN-TTR02. The results, which can be reviewed in a press release issued by Alnylam this morning, and subsequent spike in the share price appears to have garnered interest in upside call options on the stock. It looks like traders snapped up around 500 of the July $15 strike call for an average premium of $0.76 apiece earlier in the session. Intraday price action now sees those calls trading for more than three times that amount, with the bid/ask spread on the contracts up at $2.55/$2.80 as of 1:05 p.m. in New York. Calls are also in play at the July $17.5 strike where 700 contracts changed hands versus zero open positions. Early-birds stepped in this morning to buy around 150 of the calls for an average premium of $0.12 apiece, a bargain compared to the current asking price of $0.85 per contract. Options volume on ALNY exceeds 2,750 contracts this afternoon versus the stock’s overall open interest level of 2,386 contracts.

SFD – Smithfield Foods, Inc. – Shares in Smithfield Foods fell 4.5% today to at a near 52-week low of $18.05 after the stock was cut to ‘Underperform’ from ‘Buy’ with a 12-month target price of $20.00 at Credit Agricole Securities. Options activity on the hog producer and pork processor this morning suggests some traders are positioning for shares in Smithfield to extend losses in the near term. At least one strategist targeted the Aug. $18 strike put; purchasing 2,000 of the contracts for a premium of $0.75 apiece. The bearish stance may be profitable at expiration next month in the event Smithfield’s shares slide another 4.4% to breach the breakeven price of $17.25. Shares in the food products company last traded below $17.25 back in November 2010.

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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