IB Options Brief: Spirit AeroSystems Holdings, Inc. (SPR), Moody's Corp. (MCO) & Zions Bancorporation (ZION)
Bullish Options In Play At Spirit AeroSystems
SPR ñ Spirit AeroSystems Holdings, Inc.
Shares in the manufacturer of commercial aircraft structures and components rallied 3.3% to $23.72 this morning on the heels of Alcoaís positive earnings surprise and improved outlook for the global aerospace industry. Spirit appears to have received a vote of confidence from one strategist selling a large block of October expiry put options. It looks like the trader sold 3,145 puts at the Oct. $20 strike to pocket premium of $0.85 apiece. The put seller walks away with the full amount of premium in pocket as long as Spiritís shares exceed $20.00 at expiration in six months. Options volume on Spirit AeroSystems today is higher than usual given the stockís 90-day average volume of 104 contracts and an overall open interest reading of approximately 8,190 existing positions.
MCO ñ Moodyís Corp.
A sizable put spread initiated on ratings agency, Moodyís Corp., this morning indicates one strategist may be looking for shares in the name to pull back ahead of May expiration. Moodyís Corp.ís shares, which last week touched a new 3-year high of $43.05, are up 2.6% today at $41.83 and 21.5% year-to-date. The put spread on MCO may be the work of an investor taking an outright bearish stance on the stock, or, alternatively, employing a protective strategy to hedge a long position in the shares, ahead of the Companyís first-quarter earnings report on April 26th. The trader appears to have purchased a 1,950-lot May $37/$40 put spread for a net premium of $0.58 per contract. Profits or downside protection kick in should shares in Moodyís drop 5.8% to breach the effective breakeven price of $39.42, while maximum possible gains of $2.42 per contract are available in the event that shares plunge 11.5% to settle below $37.00 at May expiration.
ZION ñ Zions Bancorporation
Heavy call buying in the front month options on Zions suggests one or more traders are positioning for shares in the holding company to extend gains in the near term. The stock is currently up 2.9% to stand at $20.87 as of 11:40 a.m. in New York. Options activity is concentrated at the April $20 strike, where more than 8,400 in-the-money calls changed hands against approximately 2,160 open positions. It looks like much of the volume was generated by call buyers paying an average premium of $0.88 apiece. Traders long the call options profit at expiration next week in the event that ZIONís shares settle above the average breakeven price of $20.88. Zions Bancorp reports first-quarter earnings after the closing bell on April 23rd, several days after the April contracts expire.
Note: The material presented in this commentary is provided forinformational purposes only and is based upon information that isconsidered to be reliable. However, neither Interactive Brokers LLC norits affiliates warrant its completeness, accuracy or adequacy and itshould not be relied upon as such. Neither IB nor its affiliates areresponsible for any errors or omissions or for results obtained from theuse of this information. Past performance is not necessarily indicativeof future results.
This material is not intended as an offer or solicitation for thepurchase or sale of any security or other financial instrument.Securities or other financial instruments mentioned in this material arenot suitable for all investors. Any opinions expressed herein are givenin good faith, are subject to change without notice, and are onlycorrect as of the stated date of their issue. The information containedherein does not constitute advice on the tax consequences of making anyparticular investment decision. This material does not take into accountyour particular investment objectives, financial situations or needsand is not intended as a recommendation to you of any particularsecurities, financial instruments or strategies. Before investing, youshould consider whether it is suitable for your particular circumstancesand, as necessary, seek professional advice.
View Caitlin Duffy's post archive >