Options Intelligence Reports: Procter & Gamble Co. (PG) & Cheniere Energy, Inc. (LNG)
PG ñ Procter & Gamble Co.
A bullish buy-write strategy on the consumer products manufacturer caught our eye this morning. It looks like one options player picked up a sizeable chunk of PG shares and simultaneously sold long-dated out-of-the-money call options against the stock. Shares in Procter & Gamble are up 0.40% at $64.59 as of 12:20 pm, but earlier rallied as much as 0.90% to hit an intraday high of $64.91.
It appears the investor purchased 330,000 shares in PG for $64.8928 each, and sold about 10,000 calls at the January 2012 $70 strike for a premium of $2.03 each on a delta of about 0.33. The sale of the calls cheapens the price paid to get long shares of the underlying stock and establishes an effective exit strategy for the trader should shares breach $70.00 in the next 14 months.
The investor may walk away with gains of approximately 11.35% if PG shares rally up from the effective purchase price of $62.8628 and trade above $70.00 by expiration day in January 2012. PG shares last hit their current 52-week high of $65.00 back on November 5, 2010.
LNG ñ Cheniere Energy, Inc.
Shares of the operator of liquefied natural gas receiving terminals and natural gas pipelines jumped 14.4% today to secure an intraday high of $5.00 after Citigroup upped its price target on the stock to $5.00 from $3.75. Bullish options traders expecting Cheniereís shares to continue to climb ahead of December expiration scooped up call options.
Investors purchased approximately 1,300 calls up at the December $6.0 strike for an average premium of $0.20 apiece. Call buyers at this strike make money if LNG shares jump 24% and trade above the effective breakeven price of $6.20 by December expiration day. Options implied volatility on the stock is up 5.5% as of 12:55 pm to arrive at 100.16%.
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