Options Intelligence Report: Verizon Communications, Inc. (VZ) & Health Care Select Sector SPDR (XLV)
VZ ñ Verizon Communications, Inc.
The provider of communications services to the fixed-line and wireless markets realized a 1.65% rally in shares during the trading session to arrive at $31.09. Verizon-bulls scurried around the February contract, initiating optimistic plays on the stock using both calls and puts. Call buying at the February $31 strike suggests some investors expect VZís shares to rally further ahead of expiration next month. Roughly 3,100 calls were picked up at the now in-the-money February $31 strike for an average premium of $0.79 per contract. Call-buyers stand ready to bank profits on the contracts if shares appreciate above the breakeven price of $33.79 by expiration day.
Further evidence of bullish sentiment appeared on the put side of the field. Option traders shed 2,000 puts at the February $29 strike to pocket an average premium of $0.15 per contract. The higher February $30 strike had 6,100 puts sold for about $0.35 apiece. Put-sellers retain the full premium received on the transactions if Verizonís share price trades above the respective strike prices described above through expiration in February. Option implied volatility is down 8.36% on the day to an intraday low of 20.15%.
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XLV ñ Health Care Select Sector SPDR
Shares of the XLV, which generally mirrors the total return of the Consumer Services Select Sector of the S&P 500 Index, are up 2.25% to $32.95. Large health care and benefits firms such as Aetna and UnitedHealth Group are also up sharply today. The rise in the value of the underlying stock prompted plain-vanilla call buying as well as put buying during the session.
Traders picked up 11,100 calls at the February $33 strike for an average premium of $0.53 per contract. Call buyers at this strike are positioned to amass profits above the effective breakeven price of $33.53. Other investors purchased 5,100 in-the-money put options at the same February $33 strike for $0.70 premium apiece. Perhaps put buyers are long the underlying shares of the fund and seeking downside protection on stock positions in case shares of the XLV slip ahead of Februaryís expiration day.
Finally, health care sector optimists coveted 14,000 call options at the higher March $34 strike for an average premium of $0.35 per contract. Shares of the exchange-traded fund must rally another 4.25% from the current price for March $34 strike call buyers to breakeven at a share price of $34.35.
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