IB Options Brief: Kimberly-Clark Corp. (KMB) & Aetna, Inc. (AET)
KMB ñ Kimberly-Clark Corp.
Options traders appear to be placing bullish bets on the consumer products giant today, just a few weeks before the firm is slated to report fourth-quarter earnings before market opens for trading on January 25, 2011. Kimberly-Clarkís shares are currently down 0.30% at $62.92 as of 12:55pm, but earlier slipped to a session low of $62.81.
Investors positioning for a rally in the toilet paper makerís shares picked up at least 1,250 in-the-money calls at the February $62.5 strike for an average premium of $1.54 each. The 1,938 calls exchanged at that strike thus far today far exceed the 325 lots of open interest at that strike. Call buyers are poised to profit should KMBís shares increase 1.8% over the current price of $62.92 to surpass the average breakeven point at $64.04 ahead of February expiration.
Trading traffic in Kimberly-Clark call options is heaviest at the April 2011 $62.5 strike where 5,315 in-the-money contracts changed hands, versus previously existing open interest of just 847 lots at that strike. The majority of the calls were purchased for an average premium of $1.90 apiece. Investors holding these contracts make money if KMB shares gain 2.35% to trade above the effective breakeven price of $64.40 before the calls expire in April. The sharp rise in demand for KMB calls helped lift the overall reading of options implied volatility on the stock 12.8% to 13.96% in early afternoon trade.
AET ñ Aetna, Inc.
Shares of the health care benefits company are up 2.5% this afternoon to stand at $32.29 as of 1:45pm. Aetnaís shares are perhaps higher today in sympathy with managed care firm Centeneís shares after it received an upgrade to ëoverweightí from ëunderweightí by an analyst at Barclays. Aetna popped up on our scanners earlier in the session after a large number of calls were purchased in the April contract.
It looks like the investor responsible for the transaction purchased 15,000 calls at the April $33 strike for a premium of $1.37 each. Buying the contracts prepares the bullish trader to profit should shares surge 6.4% over the current price of $32.29 to exceed the effective breakeven price of $34.37 ahead of April expiration. Aetna is scheduled to report fourth-quarter earnings before the market opens on February 4, 2011.
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