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Daily Options Intelligence Report

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Bullish investors sprinkle optimistic spread trades on Alcon

Mon, Nov 2 2009, 05:40 GMT
by Andrew Wilkinson

Interactive Brokers LLC

ACL - Alcon, Inc. – Medical supplies producer, Alcon, attracted long-term bullish option traders to the May 2010 contract. Shares slipped slightly lower by 0.5% to $144.02 by noontime (EDT). It looks as though one investor financed the purchase of a call spread by selling put options. The three-legged trade involved the sale of 4,200 puts at the May 120 strike for about 4.20 apiece. Next, the investor purchased the same number of call options at the May 155 strike for 7.25 each, spread against the sale of 4,200 calls at the higher May 165 strike for 4.50 per contract. The trader receives a credit of 1.45 each on the strategy. The full credit is retained by the investor as long as shares of ACL remain higher than $120.00 through expiration in May. Additional profits accumulate if the stock surges 7.5% to surpass the breakeven point at $155.00. Maximum additional profits available to the investor amount to 10.00 per contract, attainable if shares add 15% to $165.00 ahead of expiration in May.

NVTL - Novatel Wireless, Inc. – Shares of the telecommunications company are trading more than 26% lower this morning to $9.02. The stock tumbled after the firm warned that sales of its mobile wi-fi product will likely plateau or even decline. Investors are apparently focusing on the dismal fourth-quarter guidance from NVTL rather than on the better-than-expected third-quarter earnings of 20 cents per share. Traders initiated fresh positions at the out-of-the-money January 2010 7.5 strike where approximately 2,250 puts changed hands for about 35 cents each. Option implied volatility fell 9% from the opening reading of 65% to the current value of 59%.

LVS - Las Vegas Sands Corp. – The casino resort operator posted a wider-than-expected third-quarter loss of 19 cents per share, but experienced a 3.2% increase in net revenue to $1.14 billion. Shares are up 8% to $15.93 on sentiment business may have reached a bottom in Las Vegas. Investors exchanged nearly 60,000 contracts on the stock by 10:25 am (EDT). Approximately two call options changed hands for each put option in action.

MSTR - Microstrategy, Inc. – Third-quarter results at the software company blew average forecasts out of the water. Shares surged as much as 24% to $90.98 at the start of the trading session after MSTR posted earnings of $1.73 per share versus the Street consensus of just 94 cents per shares. The stock is currently trading 17.5% higher to $86.44. Fresh call positions were established at the out-of-the-money November 95 strike for about 1.10 apiece. Call premium at that strike has exploded 2,100% since yesterday. Option implied volatility jumped 31% from an opening value of 32% to the current reading of 42%.

Published on  Mon, Nov 2 2009, 05:42 GMT