Caitlin Duffy
Interactive Brokers LLC
Today’s tickers: EL, HAR & UBNT
EL – Estee Lauder Companies Inc. – Shares in Estee Lauder are bucking the trend today, up 0.85% at $66.57 as of 12:15 p.m. ET, amid a down day for U.S. stocks. Options on the manufacturer of skin care, makeup, fragrance and hair care products are more active than usual ahead of the company’s fourth-quarter earnings report next Thursday after the closing bell, with overall volume approaching 3,000 contracts as compared to average daily volume of around 650 contracts. EL shares have surrendered roughly 8.0% of their value since touching a 52-week high of $72.70 back on May 28th, but options changing hands on the stock today suggest some traders are positioning for the price of the underlying to recover in the near term. The Sep $70 strike calls are the most actively traded contracts thus far in the session, with around 2,200 lots in play against open interest of 389 contracts. It looks like much of the volume was purchased for an average premium of $0.80 apiece, thus positioning buyers of the contracts to profit at September expiration in the event shares gains more than 6.0% to surpass the average breakeven point at $70.80.
HAR – Harman International Industries, Inc. – Trading traffic in Harman International Industries options today suggests some traders are gearing up for shares in the name to push higher in the near term. The stock increased as much as 6.6% today to touch a new 52-week high of $69.16 after the maker of stereo and audio equipment reported fourth-quarter earnings and revenue growth above analyst estimates.
Traders positioning for shares in Harman to extend gains appear to be snapping up August expiry calls.
The most actively traded front month calls as measured by volume are the Aug $70 strike contracts, with upwards of 1,100 lots in play versus zero open interest as of midday in New York. Time and sales data indicates most of the volume was purchased for an average premium of $0.26 each. Call buyers stand ready to profit at expiration next week if shares in HAR rise 1.6% over today’s high of $69.16 to settle above the average breakeven price of $70.26. It looks like 300 of the Aug $72.5 strike calls were also purchased during morning trading for a premium of $0.10 each. Overall options volume on the stock, currently hovering around 4,150 contracts, is well above Harman’s average daily volume of roughly 800 contracts.
UBNT – Ubiquiti Networks Inc. – Call options purchased on communications technology company, Ubiquiti Networks, ahead of Thursday’s fourth-quarter earnings release are generating big gains for at least one trader today, with shares in the name up more than 26% at $26.79 as of 11:40 a.m. ET. The company posted better than expected earnings and sales in the quarter and forecast higher than expected net income and revenue for the first-quarter. Call open interest in the Aug $22 strike calls increased by roughly 350 contracts yesterday after one strategist purchased a block of 300 calls at a premium of $1.40 each just before midday on Thursday. The Aug $22 strike calls are now deep in the money and changing hands at a last traded price of $4.20 each less than 24 hours later. Earlier in the session, premium on the $22 call reached as high as $6.65, while shares touched an intraday peak and new 52-week high of $29.40.
The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
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