IB Options Brief: Newell Rubbermaid, Inc. (NWL) & Hain Celestial Group, Inc. (HAIN)

Posted May 4th, 2012 by Caitlin Duffy in Unusual Activity

NWL - Newell Rubbermaid, Inc.
A large block of call options sold on Newell Rubbermaid launched the consumer products maker onto our ëhot by options volumeí market scanner this morning. The massive trade indicates the seller of the options expects the price of the underlying to remain below $20.00 through June expiration.

Shares in NWL are currently down 1.5% on the day at $18.37 as of 11:55 pm in New York. It looks like the trader responsible for the transaction sold 30,000 calls at the June $20 strike to pocket premium of $0.15 per contract. The call seller walks away with the full amount of premium in hand if the calls expire worthless next month.

The transaction in Newell Rubbermaid options does not appear to be tied to any trade in the underlying shares, although the call seller may already hold a position in the stock. If these are covered calls, the options play provides some extra income but limits profits on the upside, while a naked short sale of 30,000 contracts could result in devastating losses in the event of an unanticipated sharp move higher in the shares above $20.15 ahead of June expiration.

HAIN - Hain Celestial Group, Inc.
Shares in the maker of natural and organic food products rallied as much as 8.8% today to an intraday and new all-time high of $51.48 after the Company posted better-than-expected third-quarter earnings on Thursday. Front month call and put buying on Hain Celestial indicates some traders are positioning for further upside, while others may be bracing for nearterm turmoil.

Bullish players picked up around 740 of the May $50 strike calls for an average premium of $0.78 apiece this morning, and may profit at expiration in a couple of weeks if shares in HAIN settle North of the average breakeven price of $50.78. Meanwhile, traders purchasing more than 300 of the May $45 strike puts today for an average premium of $0.21 each are prepared for the stock to reverse recent gains. Put buyers profit if Hainís shares drop more than 11.0% from the current price of $50.47 to breach the effective breakeven point on the downside at $44.79 by expiration.

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