IB Options Brief: Linear Technology Corp. (LLTC) & General Motors Co. (GM)
LLTC ñ Linear Technology Corp.
It looks like some investors are building up bullish positions on Linear Technology Corp. today, with the semiconductor companyís third-quarter earnings report a little less than three weeks away. Shares in LLTC increased as much as 1.1% at the start of the session to touch an intraday high of $34.01, but relinquished most of the morningís gains to stand just 0.15% higher on the day at $33.67 as of 1:20pm.
Options players traded more than 8,200 calls at the April $34 strike, exceeding open interest of 5,926 contracts at that strike. Most of the calls appear to have been purchased by near-term optimists for an average premium of $0.49 per contract. Call buyers profit on the long-call position if shares in LLTC rise 2.4% over the current price of $33.67 to surpass the average breakeven point on the upside at $34.49 before the contracts expire in three weeks.
GM ñ General Motors Co.
The automaker said U.S. sales rose 9.6% in March, which came in below average analyst forecasts, but the discrepancy has not prevented shares in GM from rising sharply today. The stock is currently up 3.5% to stand at $32.11 as of 12:40pm in New York. Options traders have traded nearly 60,000 contracts on General Motors in early-afternoon trade, with more than 2.3 calls changing hands on the automaker for each single put option in action. April contract call and put options are attracting the greatest amount of trading traffic, followed by substantial volume in the May contract options.
Meanwhile, it looks like fresh positioning in longer-dated calls is the work of a bullish player expecting GMís shares to continue their upward trajectory through July expiration. The investor appears to have purchased 5,000 calls at the July $35 strike, on previously existing open interest of just 511 contracts, for an average premium of $0.88 each.
The call buyer stands ready to profit in the event that shares in the auto manufacturer surge 11.7% over the current price of $32.11 to surpass the average breakeven price of $35.88 by July expiration. GMís shares last closed above $35.88 back on February 18, 2011. The flurry of options activity in the stock today helped lift GMís overall reading of options implied volatility 7.9% to 31.99% as of 12:55pm. General Motors Co. reports first-quarter results on May 17, 2011, before the market opens for trading.
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