Options Intelligence Report: Financial Select Sector SPDR (XLF), The Mosaic Co. (MOS) & Research in Motion Ltd. (RIMM)
Call Options On Financials ETF (XLF) In High Demand
XLF ñ Financial Select Sector SPDR
Near-term bullish bets that shares of the XLF, an exchange-traded fund designed to provide investment results that correspond to the price and yield performance of the Financial Select Sector of the S&P 500 Index, are set to rally ahead of July expiration jumped during afternoon trading. Shares of the ETF increased nearly 1.5% during the session to stand at $14.52 by 3:15 pm (ET). Options investors itching for a rally in the price of the underlying shares purchased at least 115,000 calls outright at the July $15 strike for an average premium of $0.08 per contract. Call buyers are prepared to profit should shares of the XLF gain 3.85% to trade above the average breakeven price of $15.08 by expiration next Friday.
MOS ñ The Mosaic Co.
Shares of the producer and marketer of concentrated phosphate and potash crop nutrients are up 3.3% to $46.20 with less than 45 minutes remaining ahead of the closing bell. Mosaicís shares earlier rallied as much as 3.95% to touch an intraday high of $46.49. One bullish strategist purchased a debit call spread on the stock in order to position for Mosaicís shares to increase substantially by expiration day in September. The trader picked up 2,800 calls at the September $50 strike for an average premium of $1.99 apiece, and sold the same number of calls at the higher September $65 strike for an average premium of $0.07 each. Net premium paid for the spread amounts to $1.92 per contract. The investor responsible for the transaction makes money as long as the potash producerís shares surge 12.4% in the next several months to exceed the average breakeven point on the spread at $51.92 by expiration. Maximum available profits of $13.08 per contract pad the investorís wallet if MOS shares jump 39.8% to trade above $65.00 by expiration day in September. Mosaicís shares last traded above $65.00 back on January 11, 2010, when the stock reached an intraday and new 52-week high of $68.28.
RIMM ñ Research in Motion Ltd.
News the Blackberry maker plans to start an applications store as well as consumer Internet services in China sent RIMMís shares up 8.47% in afternoon trading to an intraday high of $53.65 by 3:25 pm (ET). Optimism on the firmís expansion in the Chinese market was reflected in options trading patterns today as investors scooped up in- and out-of-the-money call options on the stock. Traders picked up at least 6,900 now in-the-money calls at the July $52.5 strike for an average premium of $1.11 apiece. Buying interest spread to the higher July $55 strike where some 12,800 calls were coveted by investors paying an average premium of $0.39 per contract. Investors long the July $55 strike calls make money if RIMMís shares rally 3.25% over todayís high of $53.65 to trade above the average breakeven point to the upside at $55.39 by July expiration day. Other bulls bought 2,500 calls at the higher July $57.5 strike for an average premium of $0.14 a-pop, and purchased 1,500 calls at the July $60 strike for an average premium of $0.06 each. Investors targeting the July $75 strike shelled out one penny per contract to take ownership of approximately 2,100 call options at that strike. More than 138,000 option contracts changed hands on the smartphone maker by 3:35 pm (ET), with investors trading approximately 1.45 calls on the stock for each single put option in action during the session. The overall reading of options implied volatility on Research in Motion Ltd. declined 7.1% to stand at 38.47% just before the final bell.
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