IB Options Brief: Sysco Corp. (SYY) & Ardea Biosciences, Inc. (RDEA)

Posted April 23rd, 2012 by Caitlin Duffy in Unusual Activity

SYY ñ Sysco Corp.
Food distributor, Sysco Corp., popped up on our ëhot by options volumeí market scanner this morning after a large number of put options were purchased in the front month. The influx of protective positioning may be a knee-jerk reaction to the pullback in the stock and the broader market this morning, or a pre-earnings bearish bet ahead of the Companyís third-quarter results due out on May 7th ahead of the opening bell. Shares in Sysco Corp. are down 1.75% at $28.52 this afternoon.

Approximately 5,700 puts changed hands at the May $28 strike against open interest of 4,192 positions in the first 30 minutes of the trading session. It looks like most of the contracts were purchased at an average premium of $0.45 apiece, thus positioning buyers of the put options to profit should shares in SYY slide 3.4% lower to breach the average breakeven point on the downside at $27.55 by May expiration.

RDEA ñ Ardea Biosciences, Inc.
A timely bullish options play initiated on Ardea Biosciences on Friday appears to have resulted in big profits given the more than 50.0% rally in the stock today on news AstraZeneca Plc will acquire the biotechnology company for $32.00 a share or $1.26B. Shares in San Diego, California-based Ardea are currently up 51.6% at $31.60 as of 11:40 a.m. ET.

Open interest in front month call options on RDEA jumped the afternoon of Friday April 20th after a block of 100 calls changed hands at the May $22.5 strike. It looks like the trader initiating the position purchased the contracts at a premium of $0.54 each. AstraZenecaís announcement today sent Ardeaís share price flying, lifting premium on the now deep in-the-money call options to an intraday peak of $9.10.

A block of 100 $22.5 strike calls sold this morning at a premium of $8.90 per contract. If Fridayís call buyer is responsible for this morningís 100-lot sale, the return on that position amounts to a cool $8.36 per contract. Ardea Biosciences is scheduled to report first-quarter earnings ahead of the opening bell on May 4th.

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