IB Options Brief: Intel Corp. (INTC) & Genworth Financial, Inc. (GNW)
INTC ñ Intel Corp.
The chip giant reports third-quarter earnings one week from today. One strategist responsible for hefty prints in Intel Corp. put options this morning may be prepping for disappointment next week and the remainder of 2011. Shares in Intel gained 0.40% this afternoon to trade at $22.97. The stock has rallied an impressive 12.4% over the past seven days, and more than 17.0% since the beginning of September. But, a sizable ratio put spread on the stock yields maximum benefits to its owner should shares in the tech-bellwether surrender recent gains to drop to fresh 52-week lows by December expiration. The investor responsible for the large spread appears to have purchased 16,000 puts at the Dec. $21 strike for a premium of $0.72 each, and sold 32,000 puts at the lower Dec. $18 strike at a premium of $0.23 apiece. Net premium paid to initiate the transaction amounts to $0.26 per contract. The trader profits if shares in Intel fall 9.7% from the current price of $22.97 to breach the effective breakeven point at $20.74 by expiration day. Maximum potential profits of $2.74 per contract are available to the investor if INTCís shares plunge 21.6% to settle at $18.00 at expiration in December. The spread may be an outright bearish bet on the chip maker or downside protection on a long position in the underlying shares.
GNW ñ Genworth Financial, Inc.
Call options on Genworth Financial are more active than usual this morning on reports of renewed takeover chatter. The rumor mill helped drive a more than 4.2% rally in the insurerís shares to $5.68 by 11:35 am in New York. Near-term options are the most active contracts, with more than 9,600 calls changing hands at the Oct. $6.0 strike in the first half of the session. It looks like most of the calls were purchased for an average premium of $0.21 apiece. Call buyers profit if shares in GNW rally 9.3% over the current price of $5.68 to surpass the average breakeven point to the upside at $6.21 by October expiration. Bullish sentiment spread to the Nov. $6.0 and $7.0 strike calls, as well. It looks like investor picked up around 1,100 calls at the $6.0 strike for an average premium of $0.55 each, and purchased some 1,500 contracts at the $7.0 strike at an average premium of $0.26 a-pop. Investors long the higher-strike call options profit in the event that Genworthís shares surge 27.8% to top $7.26 at expiration day next month. Shares in the insurer last traded above $7.26 at the beginning of August. GNW is scheduled to report third-quarter earnings after the final bell on November 3.
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