IB Options Brief: Dean Foods Co. (DF) & Netgear, Inc. (NTGR)

Posted November 8th, 2011 by Caitlin Duffy in Unusual Activity

Todayís tickers: DF & NTGR

DF ñ Dean Foods Co.

The food and beverage providerís shares are up 3.85% at $10.55 in early-afternoon trade, ahead of the companyís third-quarter earnings report before the opening bell on Wednesday. Heightened activity in December contract calls this morning suggests one player is positioning for the price of the underlying to continue to climb ahead of expiration next month. Dean Foods Co. was raised to ëOverweightí from ëEqual Weightí with a share price target of $13.00, up from $11.00, at Stephens today. It looks like one investor was responsible for much of the volume printed in Dean Foods calls in the first half of the session. The trader appears to have purchased 3,325 calls at the Dec. $11 strike for an average premium of $0.52 per contract. Profits may be available to the investor on the position in the event that the dairy processorís shares surge 9.2% to trade above the average breakeven price of $11.52 by December expiration. Shares in the Dallas, Texas-based company last traded above $11.52 back in July.

NTGR ñ Netgear, Inc.

The maker of networking products popped up on our ëhot by options volumeí market scanner this morning due to greater-than-usual activity in Netgear calls. Shares in NTGR surged 8.8% to an intraday high of $38.35 today, and it looks like a number of options players are prepared to profit should the stock continue its run higher in the near term. Investors traded 399 calls at the Nov. $39 strike against zero open positions, and appear to have purchased most of the contracts for an average premium of $0.68 apiece. Traders long the calls may profit at expiration if Netgearís shares rally another 3.5% over todayís high of $38.35 to surpass the average breakeven point at $39.68. Bulls purchased another 191 calls at the higher Nov. $40 strike, and picked up 111 calls at the Nov. $41 strike, for average premiums of $0.43 and $0.28 each, respectively. Netgear is scheduled to participate in the Goldman Sachs Small Cap Technology 1 on 1 Conference on Thursday in San Francisco, California.

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