Options Intelligence Report: Arena Pharmaceuticals, Inc. (ARNA) & Expedia, Inc. (EXPE)

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Arena Pharmaceuticals Options In High Demand As Shares Rally To New 52-Week High

ARNA ñ Arena Pharmaceuticals, Inc.
Shares of the biotechnology firm surged 14.6% this morning to a new 52-week high of $8.00 inspiring options investors to establish near-term bullish stances on the stock as the battle royal between the firm and its competitors to get an obesity drug on the market continues to rage. Arenaís shares are currently up 7.90% to stand at $7.53 as of 12:35 pm ET.

Investors positioning for continued upward movement in the price of the underlying shares picked up 1,900 now in-the-money calls at the August $7.0 strike for an average premium of $0.93 apiece. In-the-money call coveters make money if Arenaís shares are trading above the average breakeven price of $7.93 at expiration.

Buying interest spread to the higher August $8.0 strike where bulls purchased approximately 2,600 calls for an average premium of $0.58 each. Arenaís shares must rally 13.95% over the current price of $7.53 in order for August $9.0 strike call buyers to start to accumulate profits above the breakeven point to the upside at $9.58 by expiration day in August.

Other optimists paid an average premium of $0.27 per contract to take ownership of 1,000 calls at the August $9.0 strike. Traders long the higher-strike calls profit as long as ARNAís shares jump 23.1% to surpass the breakeven price of $9.27 by August expiration. Options traders exchanged more than 46,900 calls on the stock by 12:42 pm ET. Approximately 2.35 calls changed hands on Arena for each single put option in action thus far in the trading session.

 


EXPE ñ Expedia, Inc.
Online travel company, Expedia, popped up on our ëhot by options volumeí market scanner in the first half of the trading day due to near-term activity in both calls and puts. Expediaís shares surged 9.5% to touch an intraday high of $23.08 on news the firm reported earning second-quarter net income of $0.44 a share, which exceeded the average analyst forecast of $0.42 a share, after the closing bell on Thursday evening. EXPEís shares are currently up 7.40% on the day at $22.63 as of 12:50 pm ET.

Bullish players hoping to see Expediaís shares extend gains scooped up approximately 1,100 now in-the-money calls at the August $22.5 strike for an average premium of $0.95 each. Call buyers stand ready to profit should the largest online travel companyís shares rally another 3.6% to surpass the average breakeven price of $23.45 by August expiration day.

Meanwhile, August $22.5 strike put options were also in demand. Approximately 1,700 puts were purchased at the August $22.5 strike for an average premium of $0.98 apiece. Perhaps put buyers are long the stock and are attempting to lock in share price gains enjoyed post-earnings.

In this scenario, downside protection kicks in should Expediaís shares fall 4.9% from the current price to breach the breakeven point on the downside at $21.52 by expiration. Otherwise, investors may be buying the puts outright because they expect shares to reverse course ahead of expiration day next month. Expediaís overall reading of options implied volatility shrank 13.6% to 38.60% post-earnings.

                                        

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