eBay bulls dabble in weekly calls as shares extend rally

Today’s tickers: EBAY, TXN & THC

EBAY - eBay, Inc. – Shares in the operator of online marketplaces kicked off the trading week in rally mode, rising more than 4.5% to $56.75 on Monday morning after the company’s 2015 forecasts at an investor day conference last week spurred a number of analyst upgrades and price target increases. The stock has gained more than 10% during the past two weeks. Short-dated bullish bets initiated on EBAY ahead of the long weekend are paying off for some options traders today. Open interest in the April 05 ’13 $55 strike weekly calls rose by more than 3,000 contracts on Thursday, with much of the volume purchased at an average premium of $0.045 apiece. Today the $55 strike calls are deep in-the-money and changing hands at roughly $1.60 each as of midday in New York. Traders who paid an average premium of $0.45 per contract last Thursday roughly tripled their money over the weekend. Meanwhile, trading traffic in weekly contracts this morning suggests options players are positioning for shares in the provider of online payment services to extend gains in the near term. Bullish traders snapped up more than 1,000 in-the-money calls at the April 05 ’13 $55 strike for an average premium of $1.70 each this morning, and picked up more than 1,000 calls at the higher April 05 ’13 $57.5 strike at an average premium of $0.36 apiece. Traders long the $57.5 strike call options may profit at expiration in the event that shares in eBay rally another 2.0% to top a new 52-week high and breakeven price of $57.86.

TXN - Texas Instruments, Inc. – A burst of put buying on semiconductor maker, Texas Instruments, on Monday morning suggests one or more traders are preparing for the price of the underlying to pullback in the near term. Shares in TXN are down 0.90% today at $35.16 as of 12:00 p.m. ET. The most actively traded contracts on Texas Instruments today are the April $35 strike puts, with volume in excess of 14,500 lots in play versus open interest of 5,141 contracts. The bulk of the put options appear to have been purchased in the early going at an average premium of $0.56 apiece. Put buyers may profit if shares in TXN drop 2.0% from the current level to breach the average breakeven point at $34.44 by April expiration. The bearish bets make money if the stock continues to sell off ahead of the company’s first-quarter earnings report at the end of the month, though the April expiry contracts are set to expire the week prior to that report.

THC - Tenet Healthcare Corp. – Shares in Tenet Healthcare, up more than 130% since this time last year, rose as much as 2.4% to $48.72 on Monday morning. The stock currently trades 0.90% high on the day at $48.00 as of 12:15 p.m., after earlier hitting the highest level since 2005. Traders anticipating new highs for shares in the health care services company in the near term stepped in to buy front month calls on the stock today, with bullish bets taking shape in the April $47 and $49 strike contracts. More than 1,500 in-the-money calls changed hands at the April $47 strike against previously existing open interest of 198 contracts. It looks like most of the $47 calls were purchased for an average premium of $1.95 each, thus positioning buyers to profit in the event that THC’s shares settle above the average breakeven price of $48.95 at April expiration. Roughly 300 of the April $49 strike calls are in play as of the time of this writing, with much of the volume purchased at a premium of $0.80 each. Traders long the $49 calls may profit at expiration given a more than 3.5% rally in the price of the underlying over the current price of $48.00 to top the breakeven point at $49.80.