Options Activity Alert: RAH, SYMC, ORCL

RAH – Ralcorp Holdings, Inc. – Shares in the St. Louis, Missouri-based producer of private-brand food products increased more than 25% this morning after packaged food products maker, ConAgra Foods, Inc., agreed to buy Ralcorp for $90.00 a share. Ralcorp Holdings, Inc. shares are currently up 26.3% on the session at $88.71, trading below the deal price announced ahead of the opening bell this morning. Relatively small increases in call open interest following Monday’s trading session indicates one or more strategists who established bullish positions on Ralcorp yesterday are enjoying massive paper profits on those positions today. A review of time and sales data for the Nov. $70 and $80 strike calls reveals 50 calls were purchased at each strike yesterday at premiums of $1.80 and $0.55 apiece, respectively. Double-digit percentage gains in the price of the underlying on news of the ConAgra deal now finds the value of these deep in-the-money call options up big, with last-traded prices of $18.70 and $8.70 each, respectively.

SYMC – Symantec Corp. – Upside call buying on the security, storage and systems software and services provider this morning suggests one or more options traders are preparing for shares in Symantec Corp. to potentially rally to fresh multi-year highs during the next eight weeks. The stock today trades 0.50% higher on the session at $18.39 as of 11:45 a.m. in New York. Symantec’s shares have increased roughly 40% since the end of July when the stock slumped to a two-year low of $13.06. The most actively traded options on SYMC this morning are the Jan. 2013 $21 strike calls, which changed upwards of 6,000 times against open interest of 2,162 contracts. Most of the volume appears to have been purchased for an average premium of $0.14 apiece within the first 10 minutes of the opening bell today. Call buyers stand ready to profit at expiration next year should shares in Symantec rally 15% over the current price of $18.39 to exceed the average breakeven price of $21.14. The Jan. 2013 $20 strike call options were also active in the early going, with roughly 900 contracts purchased for an average premium of $0.27 each. Traders taking to upside calls on SYMC may be positioning for shares in the name to extend gains ahead of the company’s January 23rd third-quarter earnings report, though these contracts expire one week prior to the earnings release.

ORCL – Oracle Corp. – Activity in weekly put options on software giant, Oracle Corp., this morning suggests at least one trader predicts shares in the name are likely to end the week above $31.50. Shares in Oracle are today trading up nearly 2% on the session at $31.57 as of midday on the East Coast. Of ORCL options expiring at the end of this week, the Nov. 30 ’12 $31.5 strike put contracts are most active, changing hands upwards of 4,500 times versus open interest of 152 positions. It looks like the bulk of the volume sold this morning for an average premium of $0.20 apiece. Put sellers walk away with the full amount of premium received on the transaction as long as shares in Oracle settle above $31.50 at expiration. Meanwhile, light weekly call buying at the $32 striking price is also a near-term bullish sign for shares in Oracle. Buyers of these contracts shelled out an average premium of $0.06 apiece in the early going and may profit in the event shares in ORCL tack on another 1.6% to top the average breakeven price of $32.06 at expiration.

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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