Options Intelligence Report: WellPoint, Inc. (WLP), Home Depot, Inc. (HD) & 3M Company (MMM)

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WLP ñ WellPoint, Inc.
Shares of the health benefits company are up 0.55% to $56.87 as of 11:00 am (ET), but the actions of one bullish individual suggest the stock may be poised to appreciate significantly in the next several months. The early-bird bull bought 12,500 calls at the September $60 strike for a premium of $3.05 per contract. The investor makes money on the call acquisition should WellPointís shares surge 10.9% from the current price to exceed the breakeven price of $63.05 by September expiration. We note that the health firmís shares traded above $63.20 as recently as April 8, 2010.

 

HD ñ Home Depot, Inc.
The provider of various building materials and home improvement supplies received a vote of confidence by one near-term bullish investor this morning despite the 1.6% decline in the value of its shares to $35.90. The optimistic options player appears to have purchased 10,000 in-the-money call options at the May $35 strike for a premium of $1.70 per contract in order to position for a rebound in the price of the underlying stock by expiration next month. Profits start to accumulate for the investor if HDís shares rally 2.2% from the current price to surpass the effective breakeven point on the calls at $36.70 ahead of May expiration. Options implied volatility is up 7.6% to 26.15% as of 11:00 am (ET).

 

MMM ñ 3M Company
The manufacturer and marketer of a diverse collection of products ranging from Post-Its to medical supplies posted an 80% increase in first-quarter earnings and raised its full-year forecast, sending its share price up 2.15% in the first half of the trading session to a new 52-week high of $89.33. Out-of-the-money call options in the May contract were very active in late afternoon trading on Monday as traders scrambled to get into position ahead of earnings. Some bullish individuals preparing for a positive earnings report were perhaps purchasing May $90 strike calls yesterday evening for an average premium of $1.19 per contract. Today, traders appear to be selling the calls for an average premium of $1.74 apiece, taking profits on the subsequent rally in the price of the underlying stock. New bullish stances were initiated at the higher May $95 strike where approximately 1,300 calls were purchased this morning for an average premium of $0.39 each. Options implied volatility collapsed 23.4% to 20.59% following 3Mís earnings report.

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Note: The material presented in this commentary is provided forinformational purposes only and is based upon information that isconsidered to be reliable. However, neither Interactive Brokers LLC norits affiliates warrant its completeness, accuracy or adequacy and itshould not be relied upon as such. Neither IB nor its affiliates areresponsible for any errors or omissions or for results obtained fromthe use of this information. Past performance is not necessarilyindicative of future results.

This material is not intended as an offer or solicitation for thepurchase or sale of any security or other financial instrument.Securities or other financial instruments mentioned in this materialare not suitable for all investors. Any opinions expressed herein aregiven in good faith, are subject to change without notice, and are onlycorrect as of the stated date of their issue. The information containedherein does not constitute advice on the tax consequences of making anyparticular investment decision. This material does not take intoaccount your particular investment objectives, financial situations orneeds and is not intended as a recommendation to you of any particularsecurities, financial instruments or strategies. Before investing, youshould consider whether it is suitable for your particularcircumstances and, as necessary, seek professional advice.

 
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