NVDA – NVDIA Corporation – The worldwide provider of visual computing technologies has seen shares rally more than 1% today to $11.51. We observed a number of option traders getting bullish on the stock and looking for continued upward movement as far out as expiration in January 2010. The near-term June contract attracted one investor to bank profits. It appears that this individual originally bought 10,000 calls at the June 11 strike price for 35 cents back on May 29, 2009 in the expectation of a rally in the stock. Today, with the June 11 calls in-the-money, he exited the position by selling the options for a premium of 75 cents apiece. The net profit pocketed on the trade amounts to 40 cents per contract or $400,000. Looking at the June 12.5 strike price, a similar strategy was employed albeit at a loss. We note that the transaction may or may not have been the work of the same investor described in the previous trade. Some 43,000 calls were sold for a dime apiece at the 12.5 strike today and look to have been originally purchased for an average premium of 18 cents. This transaction yields a net loss of 8 cents or $344,000. If both trades were initiated by the same individual, he would still be rewarded for his efforts in the amount of $56,000. Additional activity on NVDA was a massive chunk of 60,000 calls which traded to the middle of the market at the July 12 strike for an average premium of 75 cents each. Rounding out July activity was optimistic call buying enacted at the July 13 strike price where 2,000 lots were scooped up for 35 cents a pop. Finally, a bullish reversal took place in the January 2010 contract where 5,000 puts were shed at the January 10 strike price for a premium of 1.28 in order to finance the purchase of 5,000 calls at the sky-high January 15 strike for 98 cents each. The investor responsible for this trade has taken a credit of 30 cents and will add to his profits if shares can rally 30% and breach the breakeven point at $15.00 by expiration next year.
BJS – BJ Services Company – The oilfield services firm has experienced a share price decline of approximately 1% to $15.30. Despite the bearish movement in the stock, investors were seen taking bullish stances on the company amid improvements seen in demand and the price of oil. The July 17.5 strike price saw some 32,000 calls purchased for an average premium of 53 cents per contract. Traders long of the calls will be looking for shares of BJS to breach the breakeven point at $18.03 by expiration next month. The price of the stock will need to improve approximately 18% before investors strike black gold.
LDK – LDK Solar Company, Ltd. – Shares of the Chinese solar wafer producer have risen sharply today by more than 21% to $13.85 in the midst of a significant rally for solar stocks. LDK took up residence on our ‘most active by options volume’ market scanner as more than 67,000 options contracts exchanged hands on the stock. Traders appeared cautiously bullish by picking up both calls and puts across multiple expiries. The near-term June contract had 4,200 calls bought by optimistic individuals at the June 15 strike price for an average premium of 41 cents each. Should shares reverse direction by expiration, some traders have prepared to profit from downside movement as 3,800 puts were picked up at the June 12.5 strike price for 67 cents per contract. More bearish individuals got long of 2,500 puts at the lower June 10 strike for 15 cents. Guarded optimism spread to the July contract where 5,600 calls traded at the July 15 strike for about 1.65 each along with some 4,200 puts that were purchased at the July 12.5 strike price for 1.66 apiece. Finally, uber-bullish wafer-lovers looked as high as the September 17.5 strike to get long of 4,500 calls for an average premium of 1.65 per contract. LDK appeared this morning on our ‘top implied volatility % losers’ market scanner with volatility down more than 9% to 99.5%. However, volatility came roaring back throughout the trading day to peak at 119%.
