ISIS – Isis Pharmaceuticals Inc. – Very heavy share volume is apparent at Isis, the drug-maker that, with Genzyme Corporation produces mipomersen, a drug that reduces bad cholesterol in patients genetically disposed to high levels. Typically daily volume in shares of Isis stands at about 1 million, which compares to more than 7 million so far on Tuesday. The drug attained its primary goal of reducing bad cholesterol by 25% compared to a 3% reduction in patients taking a placebo but the fact that Isis announced perhaps a one-year delay in seeking FDA and EU approval sent its shares tumbling by 20% at one stage. There was also some mention today of a possible concern over elevated liver enzyme readings in some patients. Having settled by noon, shares are currently trading at $11.72. The volume suggests some investors are perhaps walking away and may return when the company has a better time horizon in place. Options trading patterns suggest that investors do not think that shares of Isis will slip below $10.00 judging by put options sold at that strike expiring in both November and December. Previously held positions at both strikes was non existent before today. There was also healthy volume at Friday’s expiring call strike at the 12.5 line where 2,300 lots was bounced between buyers and sellers for a premium reduced to 35 cents by lunch. Option implied volatility on its options rose sharply to stand at 80% following today’s news.
DTV – The DIRECTV Group, Inc. – The provider of subscription television services enticed one bullish trader to initiate a ratio call spread in the January 2010 contract. DTV’s shares are currently up 1% to $30.61 as of 12:05 pm (EDT). It appears the investor purchased 2,500 calls at the now in-the-money January 29 strike for 2.85 each, and shed 5,000 calls at the higher January 32 strike for 1.27 apiece. The net cost of the transaction amounts to 31 cents per contract. The financing provided by selling twice as many out-of-the-money calls lowers the effective breakeven point on the trade to $29.31. Thus, the investor stands to accrue maximum potential profits of 2.69 per contract if shares of DTV rally up to $32.00 by January’s expiration day.
SINA – Sina Corp. – An investor placed a calendar call spread using around call options expiring in January and March in the hope of capturing further gains on the surge in shares of online Chinese media portal, Sina Corp. Earlier the company beat earnings on solid advertising revenues topping a 31 cent estimate with an actual 34 cent per share performance. The share price jumped through its 52-week high and is currently higher by 10% at $47.20 although today’s noteworthy options took place when shares were trading at $46.75. The investor bought more than 3,000 calls at the January 45 strike paying a 4.20 premium, while simultaneously selling the identical amount of March calls at the 50 strike for a 3.20 premium. The trader is essentially long at a vastly reduced 1.0 point premium rather than 4.20 points. The maximum profit on the trade is that 5.0 point spread between the two call strikes less the net premium paid, or 4.0 points in the event the share price continues to or above $50 by the spring.
XOM – Exxon Mobil Corp. – Analyst upgrades and reports that Warren Buffet’s Berkshire Hathaway, Inc., increased its stake in XOM inspired a flurry of options activity on the oil and gas company today. Shares of Exxon Mobil are 0.5% higher at lunchtime to stand at $74.82. Bullish signals on XOM are an upgrade to ‘overweight’ from ‘equal weight’ with a $92.00 share price target at Barclays, as well Berkshire Hathaway’s buying spree. One option trader increased bullish sentiment on the stock by rolling a long call position forward to a higher strike price. The investor sold 10,000 calls at the January 2010 75 strike for 2.45 each, and purchased the same number of calls at the higher April 80 strike for 1.95 apiece. We’re going out on a limb here and suggesting that this trader held an established long position and now expects greater things from Exxon. It looks like the same investor also traded 10,000 puts at the April 70 strike for 2.66 each. The trader may have purchased the puts as downside protection, or could have sold the contracts to extend his bullish stance.
DTV – The DIRECTV Group, Inc. – The provider of subscription television services enticed one bullish trader to initiate a ratio call spread in the January 2010 contract. DTV’s shares are currently up 1% to $30.61 as of 12:05 pm (EDT). It appears the investor purchased 2,500 calls at the now in-the-money January 29 strike for 2.85 each, and shed 5,000 calls at the higher January 32 strike for 1.27 apiece. The net cost of the transaction amounts to 31 cents per contract. The financing provided by selling twice as many out-of-the-money calls lowers the effective breakeven point on the trade to $29.31. Thus, the investor stands to accrue maximum potential profits of 2.69 per contract if shares of DTV rally up to $32.00 by January’s expiration day.
SINA – Sina Corp. – An investor placed a calendar call spread using around call options expiring in January and March in the hope of capturing further gains on the surge in shares of online Chinese media portal, Sina Corp. Earlier the company beat earnings on solid advertising revenues topping a 31 cent estimate with an actual 34 cent per share performance. The share price jumped through its 52-week high and is currently higher by 10% at $47.20 although today’s noteworthy options took place when shares were trading at $46.75. The investor bought more than 3,000 calls at the January 45 strike paying a 4.20 premium, while simultaneously selling the identical amount of March calls at the 50 strike for a 3.20 premium. The trader is essentially long at a vastly reduced 1.0 point premium rather than 4.20 points. The maximum profit on the trade is that 5.0 point spread between the two call strikes less the net premium paid, or 4.0 points in the event the share price continues to or above $50 by the spring.
XOM – Exxon Mobil Corp. – Analyst upgrades and reports that Warren Buffet’s Berkshire Hathaway, Inc., increased its stake in XOM inspired a flurry of options activity on the oil and gas company today. Shares of Exxon Mobil are 0.5% higher at lunchtime to stand at $74.82. Bullish signals on XOM are an upgrade to ‘overweight’ from ‘equal weight’ with a $92.00 share price target at Barclays, as well Berkshire Hathaway’s buying spree. One option trader increased bullish sentiment on the stock by rolling a long call position forward to a higher strike price. The investor sold 10,000 calls at the January 2010 75 strike for 2.45 each, and purchased the same number of calls at the higher April 80 strike for 1.95 apiece. We’re going out on a limb here and suggesting that this trader held an established long position and now expects greater things from Exxon. It looks like the same investor also traded 10,000 puts at the April 70 strike for 2.66 each. The trader may have purchased the puts as downside protection, or could have sold the contracts to extend his bullish stance.
