Stock Options Watch: INTC, AOL, TAP

INTC – Intel Corp. – Shares in Intel kicked off the trading session in negative territory on Wednesday morning, declining as much as 1.1% versus a 0.65% decline in the S&P 500 Index in the early going. U.S. stocks have since halved earlier losses and Intel’s shares are moving higher, up 0.65% on the session at $21.90 as of 10:50 a.m. ET. Heavy trading traffic in June expiry calls near the start of the trading day suggests one strategist is positioning for shares in Intel Corp. to rally during the next few months. Upwards of 27,000 calls have changed hands at the Jun. $23 strike versus open interest of 10,898 contracts. It looks like most of the volume was purchased at an average premium of $0.26 apiece, including the single-largest print of 15,988 calls traded. The bullish bet on INTC is working this morning, with premium required to purchase the Jun. $23 strike calls up more than 30% over the $0.26 in premium paid this morning to stand at $0.35 each as of 11:00 a.m. in New York. Profits are available on the strategy at June expiration in the event that Intel’s shares rise 6.0% over the current price of $21.90 to surpass the average breakeven point at $23.26. Intel’s first-quarter earnings report is less than three weeks away, scheduled for release after the closing bell on April 16th.

AOL – AOL, Inc. – Options are changing hands at a clip on the online content, products and services provider this morning, with shares in AOL rising sharply following an upgrade to ‘Overweight’ from ‘Equal Weight’ with a target price increase to $44.00 from $38.00 at Barclays. Shares in AOL rallied as much as 9.5% during the first half of the session to $39.62. Traders anticipating additional near-term gains in the price of the underlying shares purchased front month call options on the stock this morning. It looks like buyers stepped in to buy contracts across the April $37, $38, $39, $40 and $41 strikes. The April $41 strike calls traded more than 300 times by 11:30 a.m. ET against open interest of 63 contracts. It looks like most of the volume was purchased at an average premium of $0.55 apiece, thus positioning buyers to profit should shares in AOL rally another 5.0% to top the average breakeven point at $41.55 by April expiration. Overall options volume in excess of 7,500 contracts on AOL by midday is roughly three times the stock’s average daily volume of around 2,055 contracts.

TAP – Molson Coors Brewing Co. – Shares in beer brewer, Molson Coors, have rallied 13% since the start of 2013, and one options strategist appears to be positioning for the stock to continue to rocket higher during the next seven weeks. TAP shares are down about 1.0% on Wednesday to stand at $48.80 as of 11:45 a.m. ET. The company reports first-quarter earnings on May 7th. The most actively traded options on Molson Coors this morning are the May $55 strike calls, with around 1,000 lots in play versus open interest of 180 contracts. It looks like the $55 strike call options were purchased by one trader for a premium of $0.35 apiece within the first 10 minutes of the opening bell. The strategy makes money at May expiration as long as shares in Molson Coors Brewing Co. jump more than 13% to top $55.35, the highest level since August of 2008.

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.

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.

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