IB Options Brief: Stanley Black & Decker, Inc. (SWK) & Wal-Mart Stores, Inc. (WMT)

Posted April 16th, 2012 by Caitlin Duffy in Unusual Activity

Stanley Black & Decker, Inc. (SWK)
Bullish options are in play on construction tools provider, Stanley Black & Decker, Inc., this morning with shares in the name trading up 0.45% at $77.00 as of 11:00 a.m. in New York. Sizable blocks of calls purchased on the stock in the first 15 minutes of the session suggests one or more investors may be positioning for the price of the underlying to hit new all-time highs in the near future. Stanley Black & Decker is scheduled to report first-quarter earnings after the close on Wednesday.

SWK options volume is heaviest in the May $85 strike call, where more than 1,700 contracts changed hands against open interest of 59 positions. It looks like the majority of the contracts were purchased outright for a premium of $0.35 apiece. Profits are available at expiration next month in the event that shares rally 10.8% to surpass the effective breakeven price of $85.35. The stock has come down 6.0% from the March 16th record-high of $81.90, but remains up 11.5% year-to-date.

WMT - Wal-Mart Stores, Inc.
Shares in Wal-Mart are among the top gainers in the Dow Jones Industrial Average today, helped higher by better-than-expected U.S. retail sales data released this morning. The stock is currently up 1.25% at $60.52 as of 11:30 a.m. on the East Coast. The single-largest trade in Wal-Mart options today signals possible investor optimism for continued near-term gains in the price of the underlying.

Options volume is greatest at the April $60 strike where upwards of 13,300 in-the-money calls have changed hands so far today. Current volume is less than the 14,372 open call positions at that strike. A block of 7,242 $60 calls, the largest transaction in WMT options this morning, appear to have been purchased for a premium of $0.51 a-pop at the start of the session.

All told, it looks like more than 9,200 of the front-month $60 calls were picked up at an average premium of $0.50 each. Call buyers profit as long as shares in Wal-Mart Stores exceed the average breakeven price of $60.50 at expiration this week.

-----------------------------------------------------------------------------

Note: The material presented in this commentary is provided forinformational purposes only and is based upon information that isconsidered to be reliable. However, neither Interactive Brokers LLC norits affiliates warrant its completeness, accuracy or adequacy and itshould not be relied upon as such. Neither IB nor its affiliates areresponsible for any errors or omissions or for results obtained from theuse of this information. Past performance is not necessarily indicativeof future results.

This material is not intended as an offer or solicitation for thepurchase or sale of any security or other financial instrument.Securities or other financial instruments mentioned in this material arenot suitable for all investors. Any opinions expressed herein are givenin good faith, are subject to change without notice, and are onlycorrect as of the stated date of their issue. The information containedherein does not constitute advice on the tax consequences of making anyparticular investment decision. This material does not take into accountyour particular investment objectives, financial situations or needsand is not intended as a recommendation to you of any particularsecurities, financial instruments or strategies. Before investing, youshould consider whether it is suitable for your particular circumstancesand, as necessary, seek professional advice.