IB Options Brief: Ingersoll-Rand PLC (IR) & Prologis, Inc. (PLD)

Posted April 18th, 2012 by Caitlin Duffy in Unusual Activity

IR ñ Ingersoll-Rand PLC
Options volume on the provider of industrial and security technologies and products is up sharply today, with some 9,500 contracts in play this afternoon versus the stockís 90 day average volume of 958 contracts. The bulk of the trading traffic is in the front month calls ahead of the Companyís first-quarter earnings report on Friday morning. Shares in Ingersoll-Rand are currently up 0.60% at $40.31 as of 12:45 p.m. ET.

April $41 strike calls are seeing the heaviest volume, with more than 7,200 contracts trading against 1,614 open positions. It looks like the majority of the calls were purchased at an average premium of $0.40 each. Call buyers stand ready to profit at expiration in a couple of days should IRís shares rally at least 2.7% to top the average breakeven price of $41.40.

PLD ñ Prologis, Inc.
A three-legged options combination trade initiated on Prologis this morning appears to be a near-term bearish bet that shares in the name will come under pressure during the next four weeks to expiration. The spread could be profitable if shares in Prologis sell off after the Companyís first-quarter earnings report on May 1st. Shares in the owner, operator and developer of industrial real estate are down 1.2% to stand at $34.26 as of 12:00 p.m. in New York.

It looks like the strategist responsible for the single-largest transaction in PLD options today sold 1,000 calls at the May $37 strike in order to partially offset the cost of buying the May $31/$34 put spread, all done for a net premium outlay of $0.55 per contract. Profits are available on the spread in the event that Prologis shares decline 2.4% to breach the effective breakeven price of $33.45, while maximum potential profits of $2.45 per contract amass on the downside as long as shares drop 9.5% to settle below $31.00 by expiration next month. Shares in PLD last traded below $31.00 in mid-January.

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