IB Options Brief: Pfizer, Inc. (PFE) & Joy Global, Inc. (JOY)
PFE ñ Pfizer, Inc.
A burst of call buying on pharmaceutical giant, Pfizer, Inc., suggests at least one trader is positioning for shares in the drug maker to extend gains in the near term. Shares in PFE are up 1.6% at $22.40 this morning, hovering just below the March 27th multi-year high of $22.80. The stock was initiated with a ëbuyí rating and 12-month share price target of $25.00 at ISI Group yesterday.
Weekly call volume is greatest at the April í13 $22 strike, where more than 4,800 contracts changed hands against open interest of 625 positions straight out of the gate this morning. It looks like most of these in-the-money call options were purchased for as little as $0.19 apiece. Profits are available on the long-calls in the event that shares in Pfizer settle above the average breakeven price of $22.19 at expiration. Premium on the $22 strike calls has increased substantially intraday, with the price tag to buy the contracts having more than doubled to $0.42 each in the first half of the session.
JOY ñ Joy Global, Inc.
Shares in mining equipment maker, Joy Global, rallied as much as 3.2% at the start of the session to $75.18, but the stock has since slipped into negative territory, trading down 0.50% to stand at $72.51 as of 12:50 p.m. in New York. Call buying on JOY this morning indicates traders are gearing up for shares in the Milwaukee, Wisconsin-based Company to increase in the near term. Weekly calls and front month calls saw the most action today before the stock surrendered gains to join in on the broad market decline.
In-the-money $70 strike weekly calls changed hands 1,000 times for an average premium of $3.89 apiece, and appear to have been purchased by traders expecting shares to top $73.89 at expiration. Call buyers also targeted the $75 and $77.5 strike weekly options, snapping up more than 400 lots at each strike at average premiums of $1.66 and $0.32 each, respectively.
Front month calls were most active at the April $80 strike, where more than 4,650 contracts traded against open interest of 3,935 positions. It looks like the majority of the contracts were purchased for an average premium of $0.47 apiece, thus positioning buyers to make money should Joy Globalís shares jump 11.0% to exceed the average breakeven price of $80.47 at expiration next week.
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