VMED - Virgin Media, Inc. – Virgin-bulls banked profits and established new positions on the telecommunications company this afternoon amid a 1% increase in shares to $16.54. One investor initiated the closing purchase of 10,000 put options that were originally sold short for an average premium of 68 cents apiece back on October 16, 2009. Today the trader closed out the position by buying the puts for just 15 cents each. Net profits on the trade amount to 53 cents per contract for a total of $530,000. The same investor is likely responsible for putting on a similar bullish strategy in the March 2010 contract. The March 15 strike had 10,000 puts sold short for one dollar per contract. The sale of the put options implies the trader expects shares of VMED to remain above $15.00 through expiration in March. Finally, optimism spread to the March 17.5 strike where 2,685 calls were purchased for an average premium of 1.45 apiece. Call-buyers amass profits if shares of VMED rally another 15% over the current price to breach the breakeven point at $18.95 by expiration day in March. Option implied volatility is currently 8.5% lower to 42.40%.
EWZ - iShares MSCI Brazil Index ETF – A bullish risk reversal on the EWZ in the January 2010 contract indicates investors are positioning for a rally in shares over the next couple of months. Shares of the fund are trading 1.5% higher to $76.28 this afternoon. Traders sold 5,500 puts at the January 77 strike for an average premium of 4.90 apiece in order to finance the purchase of 5,500 calls at the same strike for 3.35 each. The bullish reversal yields a net credit of 1.55 per contract. Investors retain the full 1.55 credit if shares of the Brazil Index ETF trade above $77.00 by expiration in January. Additional profits accumulate to the upside above the $77.00 breakeven price. The 1.55 credit also acts as a buffer against losses to investors in case shares fail to rise up to the strike price described. Investors short the put options stand ready to have shares of the underlying stock put to them at an effective price of $75.45 each if the put options land in-the-money by expiration.
HAL - Halliburton Co. – Near-term bearish option plays on the oil and gas company belie the more than 2% rally in shares to $30.49 during the session. Investors sold 3,500 calls at the nearly at-the-money December 31 strike for an average premium of 92 cents apiece. Call-sellers apparently do not expect shares to continue much higher by expiration in December. Additional pessimism took the form of a bearish risk reversal. It appears 1,500 calls were sold for 94 cents each at the December 31 strike to partially offset the cost of buying 1,500 puts at the same strike for 1.35 apiece. The net cost of the reversal play amounts to 41 cents per contract. Option implied volatility on HAL collapsed from an opening reading of 38.60% to an intraday low of 34.93%.
SEED - Origin Agritech Ltd. – Shares of the technology-focused crop seed company skyrocketed 50% higher to a new 52-week high of $7.84 this morning. Option traders exchanged nearly 14,000 contracts on the stock by 10:20 am (EDT) on total previous existing open interest of just 2,634 lots. Stay tuned for more information, but it looks like traders are selling December 10 strike covered calls. Option implied volatility is up a whopping 53.60% to 90.93%.
LDK - LDK Solar Co. Ltd. – The manufacturer of solar wafers posted third-quarter earnings of 27 cents per share, which blew average analyst expectations of a loss of 13 cents per share, straight out of the park. Shares of LDK are currently up 8% to $8.65. Option implied volatility contracted 15.35% to 79.09% following earnings.
USG - USG Corp. – Fresh call buying activity took place on the manufacturer of building materials this morning. Shares are trading more than 4.5% higher to $14.74. More than 4,200 calls traded as high as the December 17.5 strike by 10:30 am (EDT).
