Stock Options Watch: GNW, M, VCLK

GNW – Genworth Financial, Inc. – Bursts of activity in Genworth Financial call options in the early going on Wednesday appears to be the work of one or more traders betting the price of the underlying stock pushes toward multi-year highs during the next several months. Shares in the insurer kicked off the trading session in rally mode, initially rising 1.2% to a near two-year high of $11.02, before reversing course to trade down 1.85% on the day at $10.69 as of 11:15 a.m. ET. The stock was cut to ‘Neutral’ from ‘Buy’ at BTIG today. Shares in Genworth Financial are up roughly 170% off the 52-week low of $4.06 set back in August of 2012. Options volume in GNW is heaviest out at the Sep $13 strike, where 5,000 calls changed hands against open interest of 472 contracts. It looks like most of the volume was purchased for an average premium of $0.42 each. Buyers of these contracts stand ready to profit at September expiration should shares in GNW rally 25% over the current price of $10.69 to top the average breakeven point at $13.42. The Sep $12 strike calls are also active today, with around 1,000 lots purchased at an average premium of $0.69 apiece just before 10:00 a.m. ET this morning. Time and sales data suggests roughly 1,000 of the Sep $12 strike calls were purchased on Tuesday morning at around the same time for a premium of $0.62 each.

M – Macy’s, Inc. – Shares in department store operator, Macy’s, Inc., are up 1.3% today at a new all-time high of $47.12. Options changing hands on the retailer today indicate some strategists are positioning for the price of the underlying to extend gains in the near term. One trader appears to be rolling a bullish position in front month calls up to a higher striking price ahead of the company’s first-quarter earnings report next Wednesday before the open. The options player appears to have sold roughly 1,000 calls at the May $46 strike at a premium of $1.62 in order to purchase around the same number of calls at the higher May $48 strike for an average premium of $0.48 each. The bullish trade looks for shares in Macy’s to continue rallying to fresh record highs. Meanwhile, the most actively traded options on Macy’s as measured by volume, are the Jan 2014 $37 puts. It looks like one trader sold around 3,000 contracts at a premium of $1.05 each versus open interest of 4,225 contracts. The put seller could be selling to close an existing bearish or protective position, or initiating the strategy that results in maximum gains of $1.05 per contract as long as the stock exceeds $37.00 at expiration next year.

VCLK – ValueClick, Inc. – Investors in online marketing company, ValueClick, Inc., are taking it on the chin today, with shares in the name down 17% at $26.25 in early-afternoon trading. The stock fell sharply after the company yesterday forecast second-quarter earnings below average analyst estimates. Options traders bracing for further declines in VCLK shares snapped up front month puts on the stock. The May $25 strike puts traded more than 600 times versus open interest of 126 contracts. It looks like most of the volume was purchased in the early going for an average premium of $0.41 each. Put buyers may profit at expiration next week in the event that ValueClick’s shares decline 6.3% from the current level to trade below the average breakeven price of $24.59. September expiry options activity this morning, however, suggests at least one trader is preparing or shares to rebound. The purchase of around 640 calls at the Sep $27 strike for a premium of $2.00 each positions the strategist to profit at expiration should shares in ValueClick rally 10.5% to top $29.00. Analysts at several firms downgraded ValueClick this morning on the heels of the company’s first quarter earnings report yesterday.

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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