IB Options Brief: International Paper Co. (IP) & athenahealth, Inc. (ATHN)

Posted October 1st, 2012 by Caitlin Duffy in Unusual Activity

IP – International Paper Co.

Shares in global paper and packaging company, International Paper Co., rose 0.85% on Monday morning to $36.63, and may soar to their highest in more than five years in the near future. The stock has moved sharply higher during the past 52 weeks, trading up 70% versus the first week of October 2011. A large bullish options play initiated on IP in the first hour of the trading day suggests one strategist is prepared for shares to extend gains into 2013.

The trader appears to have paid a net premium of $1.12 per contract to buy a 5,000-lot Jan. 2013 $38/$42 call spread. The bullish position starts making money if shares in International Paper rally another 7% to top the effective breakeven price of $39.12. The trader could walk away with maximum potential profits of $2.88 per contract if shares in IP surge 15% to exceed $42.00 at expiration next year.

ATHN – athenahealth, Inc.

Bearish activity in athenahealth put options today may be the work of a trader positioning for shares in the provider of cloud-based business services for physician practices to decline ahead of, or perhaps following, the company’s third-quarter earnings report after the close on October 18th. Shares in ATHN fell 0.50% by midday on the East Coast to stand at $91.35, but are up roughly 85% since the start of 2012. It looks like one trader purchased a 500-lot Oct. $80/$85 bear put spread at a net premium of $0.95 per contract.

The put spread may represent an outright bearish stance on the stock, or could be a hedge to protect the value of a long position in the underlying shares. The strategy makes money if shares in the name slide 8% to breach the effective breakeven point at $84.05, with maximum potential profits of $4.05 per contract available in the event of a more than 12% dip in the stock price to $80.00 by October expiration.

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