Intra-day Significant Options Activity
Stocks Mentioned: CBH, CNI, GLW, KFT, MFLX, MRX, OTEX, PPD, SPWR, TLM
ALTERNATIVE ENERGY
The upside is bid in SunPower Corp (SPWR, 13.98, +0.83%) as investors bought 1,500 April 45 (.50d) calls today paying up to $1.90. While taking a long volatility position, the call buyers appear to be positioning to profit from an upside move in the stock over the next month.
CIRCUIT BOARDS
Opening investors in Multi-Fineline Electronix Inc (MFLX, 18.59, +0.43%) bought 1,500 May 20 (.43d) calls paying up to $1.10. While we would not describe the call buying as directionally bullish, they are buying volatility while gaining leverage to an upside move. Calls in MFLX average around 250 contracts traded a session. Q2 earnings are currently estimated for early May.
Over the last several quarters, MFLX has been trying to terminate its proposed acquisition of MFS Technologies Ltd. MFLX's largest shareholder, WBL Corp Limited, has yet to announce how it intends to vote. WBL Corp. has indicated to MFLX that it is seeking advice from its professional advisors with regard to its position on the transaction. As of February 5, 2007, MFLX's board continues to strongly recommend that MFLX stockholders vote against the deal.
ENERGY - OIL/GAS PRODUCTION
In Talisman Energy Inc (TLM, 16.38, +0.68%) opening investors bought approximately 3,000 October 17.5 (.50d) calls paying $1.60. This past Tuesday (3/13/07), participants bought 20,000 April/October 17.5 call spreads paying $1.25, opening in both strikes. Overall, investors are getting short volatility in April and long volatility in October with an upside bias.
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ENTERPRISE SOFTWARE
In Open Text Corporation (OTEX, 21.24, +1.48%) investors bought 1,800 May 25 (.80d) puts paying $4.00. Participants are still long roughly 1,500 of these same puts from several weeks ago (2/28/07), and are also long approximately 3,000 March 20 (.55d) puts and 1,500 May 20 (.46d) puts from over the past two months. With OTEX down approximately 8.40% over the past four weeks, these bearish investors are looking to profit in the event of further downside possibly in reaction to Q3 earnings estimated for 5/4/07.
FIBER OPTICS
In Corning Inc. (GLW, 21.74, +0.69%) opening investors bought a large upside January08 call spread today. Specifically, they sold 20,000 January08 30 calls to finance the purchase of 20,000 January08 20 calls. The call spread implies they anticipate upside movement, but not above the $30 level. Additionally today, we are seeing buyers of 4,000 May 22.5 calls. This past Monday (3/12/07), investors bought calls and sold puts in August 20p/22.5c risk reversal 7,000x paying $0.60, and the majority of recent activity has consisted of call buyers across multiple months.
FINANCIAL
In Commerce Bancorp Inc NJ (CBH, 32.95, +1.73%) investors are buyers of 3,500 June 30 (.26d) puts today in seemingly cautious trading. In recent weeks most of the order flow we have seen in CBH has been buyers of puts surrounding the delay of their 10-k filing.
FOOD
September volatility is bid today in Kraft Foods Inc (KFT, 30.78, +1.92%) through multiple trades. For example, investors bought the June/September 35 call calendar 7,500 times on a delta neutral basis. Separately, there are also buyers of 5,000 September 30 calls, 1,000 September 32.5 calls and small outright buyers of the September 35 calls. The order flow implies expectations for a notable move, possibly to the upside, ahead of September expiration (9/22/07). Over 23,000 calls are on the tape in KFT today compared to average daily volume of about 5,000 contracts.
LEGAL SERVICES
With Pre-Paid legal Services Inc. (PPD, 55.15, +5.70%) trading up approximately 7% on the day, opening investors entered the market to buy 1,000 May 50 (.24d) puts paying $2.60. In comparison, PPD typically trades on average fewer than 150 contracts a session. In buying downside volatility, the investors may be looking to protect long equity positions.
PHARMA
In Medicis Pharmaceutical Corp (MRX, 32.01, -0.65%) we are seeing buyers of out-of-the money April and July calls, and sellers of October volatility. The trading appears to convey anticipations that the stock could make a significant move in the near term, ahead of July expiration (7/21/07). Specifically, investors today have bought 1,800 July 45 calls, bought 1,200 April 40 calls, and sold 4,000 October 35 calls on a delta neutral basis. MRX expects the FDA to issue a decision regarding the approval of Perlane by the end of 1Q07.
RAIL ROADS
In Canadian National Railway Co. (CNI, 43.63, +1.04%) opening investors sold 2,000 October 45 puts with stock, on a delta neutral basis. This is increased volume as CNI typically trades on average fewer than 400 contracts a session. Indicating no directional bias, these investors are positioning for decreased levels of volatility within the October cycle. CNI is estimated to report Q1 earnings next Tuesday (4/20/07).
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