IB Options Brief: Applied Micro Circuits Corp. (AMCC) & Celldex Therapeutics, Inc. (CLDX)
AMCC ñ Applied Micro Circuits Corp.
Demand for put options on Applied Micro Circuits Corp. jumped this morning with shares in the semiconductor company falling as much as 9.3% to an intraday low of $9.65. AMCC reported a weaker-than-expected loss of $0.03 a share for the third quarter after the closing bell on Thursday, which disappointed analysts expecting the firm to earn $0.09 a share in the quarter.
Bearish options traders are positioning for shares to continue to slide in the next several months by picking up in-the-money puts expiring in May. More than 2,300 deep in-the-money put options changed hands at the May $12.5 strike on scant open interest of 373 contracts. It looks like traders paid an average premium of $2.50 apiece to buy some 1,300 of the puts.
Volume in puts traded on the stock more than doubled at the lower May $10 strike where upwards of 4,900 contracts changed hands on open interest of 124 options. The majority of these contracts were likely purchased for an average premium of $0.97 a-pop. Investors long the puts at May $10 strike start to make money if shares in Applied Micro Circuits fall another 6.4% from todayís low of $9.65 to breach the average breakeven price on the downside at $9.03 by May expiration day. Options implied volatility on AMCC plunged 30.6% to 36.52% post earnings.
CLDX ñ Celldex Therapeutics, Inc.
Call buyers paid Celldex Therapeutics a visit this morning to position for the biotechnology firmís shares to extend todayís sharp rally during the next couple of months. Shares in Celldex increased as much as 12.75% during the session to hit an intraday high of $3.89 on reports of unconfirmed takeover chatter. Activity in Celldex options is confined almost entirely to calls today, with heavy volume accumulating in the front month.
It looks like the majority of the 3,174 calls that have traded at the February $4.0 strike were purchased at an average premium of $0.24 each. Call buyers at this strike stand ready to make money should the price of the underlying rally another 9.0% over todayís high of $3.89 to exceed the average breakeven price of $4.24 by expiration day next month.
Optimism spread to the March $4.0 strike where another 684 calls were picked up for an average premium of $0.44 a-pop. The surge in demand for CLDX calls and unconfirmed takeover rumors helped push the overall reading of options implied volatility on the stock up 64.8% to 121.37% by 1:10pm in New York. Celldex is scheduled to report fourth-quarter earnings before the market opens on March 3, 2011.
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