Intra-day Significant Options Activity
Stocks Mentioned: CY, GLW, HOTT, IR, MOT, SAY, TRW, TXN, WSM
Options in TRW Automotive Holdings Corp. (TRW, 33.57, +1.39%) rarely trade, however this morning opening investors bought 5,000 January09 25 (.15d) puts paying $1.50. While taking a long volatility position, the investors could either be protecting long stock positions or speculating on long-term downside movement.
In Ingersoll-Rand Co Ltd (IR, 42.99, +0.19%) opening investors bought ~2,500 April 42.5 (.35d) puts paying up to $0.95. Buying near term downside volatility, they are likely looking to protect long stock positions. IR earnings are estimated to be released on 4/20.
Options in Corning Inc. (GLW, 21.78, +0.18%) continue to trade actively today amidst unconfirmed takeover rumors. Throughout the morning investors focused on buying April and May 22.5 strike calls as the stock climbed roughly 2% and then trading shifted to two-way with smaller sized call sellers. Recall that we have seen bullish activity throughout this week, for example we have seen buyers of calls/sellers of puts in an August 20p/22.50c risk reversal 7,000 times and buyers of 20,000 January08 20/30 call spreads.
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Activity picked up in Hot Topic Inc. (HOTT, 10.77, +2.96%) options this morning as investors sold approximately 6,500 April 10 (.25d) puts at $0.25. Taking a short volatility position, these investors likely expect limited downside movement in the next several weeks. The trading also suggests the put sellers are comfortable getting long stock at $9.75 (10 strike - $0.25 premium). HOTT trades on average fewer than 700 contracts a session and is expected to report earnings on 5/23/07. On 3/14 AMC, HOTT reported 4Q EPS of $0.20 vs. $0.21 consensus. The company also guided 1Q EPS to ($0.01)-($0.04) vs. ($0.01) consensus which assumes comparable store sales in the negative to mid single digit range on its conference call.
Amidst unconfirmed rumors Williams Sonoma Inc (WSM, 35.40, +2.46%) may put itself up for sale, we saw an influx of options activity. Investors bought 3,000 March 35 (.60d) calls and ~1,000 April 35 (.55d) calls. Earlier this week we saw buyers of the August 32.5 calls.
Cypress Semiconductor Corp (CY, 18.78, -1.11%) options were active today with 17.5 strike put sellers. Specifically, opening investors sold 5,500 April 17.5 (.25d) puts, 1,500 June 17.5 (.30d) puts and September 17.5 puts in smaller size. While getting short volatility, the put selling implies that they are likely looking for limited downside movement in the stock over the next few months.
In Texas Instruments (TXN, 31.26, -0.98%) investors bought 15,000 April 32.5 (.65d) puts paying up to $1.70. Buying at-the-money volatility, the trading does appear to be somewhat bearish. Earnings are scheduled for 4/23, which falls after April expiration (4/20/07).
In Satyam Computer Services Ltd (SAY, 20.99, -0.29%) there is seemingly bullish order flow in the options today. In separate trading opening investors bought ~2,000 April 20 (.70d) calls and bought ~4,000 April 22.5 (.40d) calls. Collectively, the call buying is equivalent to buying approximately 300,000 shares of stock, which is comparable to the stock’s average daily trading volume of 1.1 mln shares. Currently earnings are estimated for 4/16, which falls into April expiration. James Friedman, SFG's Global Business Services Analyst, has a Neutral rating on SAY.
In Motorola (MOT, 18.25, -0.60%) we have seen steady bearish activity over the past week, and this morning the trend continued with investors selling at least 25,000 April 17.5 (.70d) calls at $1.20. Recent bearish trading has involved call sellers and put buyers in the April 17.5 and 20 line and July 20 line.
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