IB Options Brief: Harry Winston Diamond Corp. (HWD) & Quanta Services, Inc. (PWR)

Posted November 16th, 2011 by Caitlin Duffy in Unusual Activity

Today's tickers: HWD & PWR

HWD ñ Harry Winston Diamond Corp.
One bullish options play on Harry Winston this morning may help cover gift-giving expenses for one investor this holiday shopping season as long as shares in the diamond supplier hold up through December expiration. Shares in the Toronto, Ontario-based company rallied 1.4% to $11.16 in the first half of the trading session. The stock popped up on our ëhot by options volumeí market scanner after one trader sold 10,000 puts at the Dec. $10 strike for a premium of $0.20 apiece. The large block of puts traded is nearly three times the size of overall open interest on the stock of 3,566 contracts. Maximum potential profits of $200,000, or $0.20 per contract, remain in the investorís wallet if shares in Harry Winston settle at or above $10.00 at expiration day. Shares in HWD had dipped to a 52-week low of $9.14 as recently as October 4. The put seller could wind up having 1 million shares of the underlying put to him at an effective price of $9.80 each, should shares retreat once more to land the options in-the-money at expiration in four weeks time. The company is scheduled to report third-quarter earnings after the final bell on December 8.

PWR ñ Quanta Services, Inc.
Shares in the provider of contracting services to the electric power, oil, natural gas and telecommunications industries gained 3.1% to stand at $19.79 in early-afternoon trade. The rally in Quanta Services, Inc. shares started earlier in the week, after the company said it won a contract worth more than $300 million to provide transmission infrastructure services on power lines for American Electric Power Co. Put selling on Quanta Services this morning indicates at least one options strategist expects shares in the name to rise from current levels and trade north of $20.00 by December expiration. Two blocks of 1,000 in-the-money put options each appear to have been sold at the Dec. $20 strike in the first 35 minutes of the session. The investor responsible for the trades may walk away with $1.20 in premium per contract on one block of puts, and $1.05 each on the other, as long as shares in Quanta Services rally another 1.05% to top $20.00 by expiration day next month. Some 200,000 shares of the underlying may be put to the investor at expiration, however, if shares settle below $20.00 and the put options land in-the-money.

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