BAC – Bank of America Corp. – Bearish option traders purchased put options on Bank of America today with shares of the firm trading 3% lower to $14.52. The number of put options purchased at the March $14 strike price surpassed existing open interest at that strike, suggesting many investors are bracing for continued near-term share price erosion. Approximately 33,000 puts were purchased for an average premium of $0.59 apiece at the March $14 strike. Investors picking up the put options perhaps anticipate B of A’s share price could slip beneath the effective breakeven point on the trade at $13.41 ahead of March expiration. The 12% increase in the reading of options implied volatility on Bank of America to 43.74% today points to increased fluctuation in the price of the underlying shares going forward.
KFT – Kraft Foods, Inc. – Shares of the U.S. food producer are up 0.40% to $28.55 this morning, but early options movements on the stock perhaps point to limited near-term gains in the price of the underlying. It looks like one trader sold roughly 5,000 out-of-the-money call options at the March $30 strike for an average premium of $0.40 each. Open interest at the March $30 strike exceeds 31,000 contracts. Thus, the trader could be banking gains on a previously established long call position. Alternatively, it is possible the trader is long the stock and engaging in covered call selling. Investors exchanged more than 8,200 contracts on Kraft in the first forty-five minutes of the trading session.
DELL – Dell, Inc. – The personal computer manufacturer’s shares are trading more than 3.30% higher in early trading to stand at $13.67. Option traders exchanged more than 21,300 contacts on the stock in the first hour of the trading session. Investors are favoring call options on Dell at the start of the trading week, with more than 4 calls traded to each single put option in play today. The most heavily populated strike price thus far is the near-term February $13 strike where more than 7,400 in-the-money calls changed hands. Options implied volatility is slightly lower by about 3.30% to 38.59%.
HPQ – Hewlett-Packard Co. – It looks like the majority of the 5,200 calls exchanged at the now in-the-money February $47 strike were purchased by investors initiating bullish stances on the tech-giant. Hewlett-Packard’s shares are trading 1.25% higher in early trading to stand at $47.90. Options traders paid an average of $1.70 per contract for the calls, and thus stand ready to amass profits if shares of the underlying stock rally above the breakeven price at $48.70 ahead of expiration day.
