IB Options Brief: JDS Uniphase Corp. (JDSU) & Accenture PLC (ACN)
JDSU ñ JDS Uniphase Corp.
Bears scooped up put options on the telecommunications equipment provider today, suggesting the price of the underlying may decline ahead of April expiration. The stock jumped 74.3% in the span or about two weeks, rallying up from $16.70 on January 31, 2011, to as high as $29.12 on Valentineís Day.
Shares in JDSU have slipped somewhat since then, surrendering more substantial ground in the most recent two weeks, and falling in sympathy with competitor Ciena Corp. yesterday after the firmís revenue forecast missed estimates. JDS Uniphaseís shares rebounded this afternoon to stand 1.00% higher on the session at $25.74. But, April contract put action indicates bearish sentiment on the stock is alive and well.
It looks like traders purchased some 3,000 puts at the April $24 strike for an average premium of $1.48 each. Pessimism spread to the lower April $23 strike where another 2,200 puts were picked up at an average premium of $1.18 a-pop. Lower-strike put buyers profit if shares in JDSU plunge 15.2% from the current price of $25.74 to breach the average breakeven point on the downside at $21.82 by expiration day next month.
ACN ñ Accenture PLC
Shares in the management consulting and technology services provider slipped 0.80% in the first half of the trading session to touch an intraday low of $51.97, but it looks like one options player is positioning for a sharp rally in the price of Accentureís shares to a new all-time high by May expiration. Analysts at Credit Suisse upped their share price target on ACN to $67.00 from $55.00.
The bullish investor initiated a call spread, buying around 1,250 calls at the May $55 strike for an average premium of $1.10 each, and selling the same number of calls up at the May $57.5 strike at an average premium of $0.44 apiece. The average net cost of putting on the spread amounts to $0.66 per contract.
Thus, the trader starts to make money if Accentureís shares rally 7.1% off todayís low of $51.97 to surpass the average breakeven price of $55.66 by May expiration. Maximum potential profits of $1.84 per contract are available to the call-spreader if shares in ACN surge 10.6% in the next few months to trade above $57.50 by expiration day.
Shares in Accenture recently secured a new all-time high of $54.55 on February 17, 2011. The investor responsible for the call spread starts to realize gains on the spread if shares best that high by at least 2.0% within the time remaining to expiration.
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