IB Options Brief: Pitney Bowes, Inc. (PBI) & Focus Media Holding, Ltd. (FMCN)

Posted June 11th, 2012 by Caitlin Duffy in Unusual Activity

PBI ñ Pitney Bowes, Inc.
Heavier than usual options activity on Pitney Bowes pushed the provider of end-to-end mail stream solutions onto our ëhot by options volumeí market scanner this morning, with the dayís volume up near 17,000 lots versus the stockís average daily volume over the past 90 days of 6,713 contracts. Shares in PBI are currently down 1.0% to stand at $14.14 in early-afternoon trading.

Almost all of the volume is in the July $13 strike put where more than 16,600 contracts changed hands against open interest of 4,205 contracts. It looks like most of the puts were sold for an average premium of $0.20 apiece, though a sizable block of calls did trade to the middle of the market as well.

Put sellers keep the $0.20 in premium received on the trade as long as shares in PBI exceed $13.00 and then contracts expire worthless at expiration next month. Traders selling the put contracts could wind up having shares of the underlying put to them at an effective price of $12.80 each in the event that PBI shares slide 9.5% to trade below $13.00 at July expiration.

FMCN ñ Focus Media Holding, Ltd.
The operator of an out-of-home advertising network in China popped up on our scanners today after a large, three-legged spread was initiated in the Jan. 2013 expiry. Shares in Focus Media Holding started the trading week in rally mode, but have since surrendered gains to trade 0.30% lower at $20.45 as of 12:30 p.m. ET on Monday.

The single-largest trade in FMCN options, the sale of 10,000 Jan. 2013 $30 strike calls against the purchase of the Jan. 2013 $12.5/$17.5 10,000-lot put spread, cost a net $0.85 per contract and may be profitable if shares in the name drop substantially during the second half of 2012. Profits kick in on the downside should FMCN shares fall 18.6% to $16.65, while maximum potential profits of $4.15 per contract are available in the event that Focus Media shares plunge 40.0% to $12.50 by expiration next year.

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