Today’s tickers: ADM, KGC, AMLN, ALKS, SOLF, HLF & EXPD
ADM – Archer Daniels Midland Co. – Knock’em dead profits at grain processor, ADM beat expectations of 72 cents per share with $1.61 per share. Shares jumped 16% to $24.50. The company processed enough soybeans and handled enough grain to add just over a billion dollars to the bottom line in the third quarter. That compares to $441 million one year ago. Having watched its shares slump in line with sliding commodity prices by as much as 55% year-to-date, option traders couldn’t act fast enough to buy calls in the January 25 line today where some 11,000 contracts were traded. Total options volume of 37,763 contracts throughout the morning session was enough to earn them a place in our market scanners top 10 for the day.
KGC – Kinross Gold Corp. – A more buoyant tone for equities spilled over into the commodity complex and allowed mining stocks to advance. There is a clear potential for sub-par global growth looking ahead and that boosts the appeal of hard assets such as gold under either a deflationary or inflationary environment. So today’s 4% advance in the price of gold also supported the share price at places such as Kinross, which also benefited from a 14.3% rally in its shares to $12.30. The move created a buzz in the options on its shares and an equivalent of around 10% of existing open interest changed hands during the morning. Rights to sell shares in November for a fixed price of $10.00 were heavily bought some 3,160 times at around 45 cents. At the January 7.5 strike price more puts were purchased at a premium of 55 cents while the two largest blocks of volume occurred in the January calls. We can tell clearly from time and sales readings that the 10 strike calls were sold 5,000 times at 3.40 but the 10,000 volume at the 15 strike was masked by a mid-market trade. The option activity is not as supportive of the underlying enthusiasm found in today’s share price movement.
AMLN – Amylin Pharmaceuticals Inc. – The company manufactures a diabetes drug in partnership with Alkermes Inc. – (ALKS), which is also one of today’s highest implied volatility gainers according to our scanning tools. Alkermes announced that it was likely to face a delay in the approval of its new drug by the FDA on account of an exchange between Amylin and the FDA noting significant differences between Alkermes own version and the production of the drug made by its partner. The sad tale shaved one-third off the market capitalization at on point in Amylin before stabilizing with a 22% drop to $8.27. The situation drew in option players who sold calls on the stock in November at the 7.5 strike at 1.15 premium. They also sold out-of-the-money calls at the 15 strike in December at around 40 cents per contract. Implied volatility rose 30% to 140% at Amylin.
SOLF – Solarfun Power Holdings ADR – Shares in this solar battery producer have spent all of October in single digits and some of that time below $5.00 per share. Today’s 12.3% rally in its shares to $9.25 is being compounded by call buying or whether it’s indeed the other way around. The November 12.5 calls have been bought on volume of over 1,200 lots at around a cost of 40 cents. Meanwhile investors paid a 2.25 premium for rights to buy shares at a fixed $7.50 by December, which infers a breakeven at expiration of $9.75 or just 5.4% above current prices.
HLF – Herbalife Ltd. – While the company reported stronger than expected profits after hours on Monday, its grim forecast for earnings from overseas due to a rising dollar trimmed the company’s value by around one quarter today to $19.95. That’s drawn in interest from option traders who chose to play January and February puts at the 20.0 strike. We’re unclear as to whether these were bought or sold, but we can see that it’s likely the same trader sold puts at the 17.5 strike in the January 2010 contract in an opening position. It appears that this investor has a dull take on the stock into next year, but perhaps expects some improvement by the time the following year rolls around.
EXPD – Expeditors Intl. – Strong earnings boosted the share price by around one-fifth at this global logistics services provider. Activity in options was seen at the January 45 strike calls. Shares added $7.17 to $39.17 on the news. The company is a non-asset based company and is able to tender competitively despite the disruptions in the haulage market. Buyers of calls today at the 45.0 strike paid 1.65 to reserve buying rights on the stock.
