Today’s tickers: LVS, INTC, DFS, BIG, SWN, MRVL, XRT & FTNT
LVS – Las Vegas Sands Corp. – Shares of the casino resort operator rallied as much as 3.5% during the trading session to hit an intraday- and new 52-week high of $47.48 on news Macau casino revenue, bolstered by China’s Golden Week holiday, jumped 50% to a record in October. Analysts at Morgan Stanley raised their target price on LVS to $50.00 from $36.00, maintained an ‘overweight’ rating on the stock, upped their EPS estimate on the company for fiscal 2010 to $0.96 a share from $0.69 a share, and increased their EPS forecast for 2011 for LVS to $1.85 per share from $1.19 per share. Options traders are initiating bullish positions on the casino operator today and are currently trading more than 2.2 calls on the stock for each single put option changing hands. Near-term November contract calls and puts are the most popular with less than 30 minutes remaining before the final bell. Bulls sold more than 1,000 puts at the November $45 and $47 strikes to pocket an average premium of $1.23 and $2.10, respectively. Investors short the puts keep the premium received as long as shares exceed the strike prices described by November expiration. Meanwhile, call buyers scooped up 1,600 in-the-money contracts at the November $46 strike for an average premium of $2.63 each. Another 1,100 calls were purchased at the higher November $47 strike for an average premium of $2.14 a-pop. Investors hoping to see LVS shares increase significantly before the year ends purchased some 1,800 calls up at the December $50 strike for an average premium of $2.24 per contract. Traders holding these contracts profit if Las Vegas Sands’ shares surge 10.00% over today’s high of $47.48 to trade above the effective breakeven price of $52.24 by expiration day next month. Options implied volatility on LVS is up 5.7% to arrive at 50.30% as of 3:40 pm in New York trading.
INTC – Intel Corp. – One big options player sold a sizeable strangle on the chip giant this afternoon to position for Intel’s shares to trade within a narrow range through December expiration. Intel’s shares hustled up 2.25% during the session to trade at $20.50 by 2:55 pm in New York. For the first time, Intel Corp. is entering the contract manufacturing business by manufacturing another company’s chips at its most advanced factories. According to the New York Times, Intel plans to start making chips for Achronix Semiconductor next year. Achronix, a small firm in Silicon Valley, makes a specialized type of microprocessor that is utilized to speed computing tasks such as shuttling network traffic and encrypting data. Intel was raised to ‘outperform’ from ‘neutral’ with a 12-month target share price of $24.90 at Macquarie Research today. But, one options trader expecting the price of Intel’s shares to stagnate in the near-term sold 25,000 puts at the December $20 strike for a premium of $0.54 each, and sold the same number of calls at the higher December $21 strike for a premium of $0.36 apiece. Gross premium pocketed by this investor amounts to $0.90 per contract. The investor keeps the full amount of premium as long as INTC’s shares trade within the confines of the strike prices described through December expiration day. Substantial moves in the price of Intel’s shares may result in losses for the strangle seller. Losses start to accumulate if shares rally above the upper breakeven price of $21.90, or should shares fall below the lower breakeven point at $19.10 by expiration day next month. The investor may be able to close out the short strangle at a profit ahead of expiration if premiums on the put and call options sum to less than $0.90 per contract.
DFS – Discover Financial Services – Shares of the electronic payment services firm increased as much as 2.4% during the session to touch an intraday high of $18.08 after announcing it has come to an agreement with Moneris Solutions, an electronic payments processor, to expand acceptance of its cards in Canada. The credit card issuer’s shares are currently up 1.35% to stand at $17.89 as of 3:20 pm. One options trader was well positioned to benefit from today’s rally and appears to have taken profits off the table today. It looks like the investor originally purchased 2,000 calls at the November $17 strike for an average premium of $0.85 each back on October 5, 2010, when DFS shares were trading around $16.83. Today the trader was able to sell all 2,000 lots at that strike for a richer premium of $1.22 per contract to pocket net profits of $0.37 apiece. Next, the investor extended bullish sentiment on the Discover Financial Services by picking up a fresh batch of 2,000 calls at the higher November $18 strike for premium of $0.56 a-pop. Other bullish players coveted approximately 1,500 November $18 strike calls at an average premium of $0.56 each. Call buyers stand ready make money should Discover’s shares increase another 3.745% over the current price of $17.89 to trade above the average breakeven point at $18.56 by expiration day in a few weeks.
BIG – Big Lots, Inc. – It looks like some options traders initiating short strangles today expect shares in Big Lots to remain range-bound through December expiration. Big Lots’ shares are currently down 0.75% to stand at $31.13 as of 12:35 pm in New York. The retailer of discounted goods ranging from food products to furniture appeared on our ‘hot by options volume’ market scanner after traders sold approximately 1,400 puts at the December $30 strike for an average premium of $1.10 each, and sold roughly the same number of calls at the December $35 strike at an average premium of $0.35 apiece. Gross premium enjoyed by strangle sellers amounts to an average of $1.45 per contract. Investors keep the full premium received on the transaction as long as the price of the underlying shares trades within the boundaries of the strike prices described through expiration day in December. The short stance in both call and put options expose stranglers to losses in the event that shares rally above the upper breakeven price of $36.45, or if shares slip beneath the lower breakeven point at $28.55, ahead of expiration next month. Other options traders populating Big Lots, Inc. today picked up approximately 1,000 in-the-money calls at the December $30 strike for an average premium of $2.23 per contract. Call buyers make money if BIG’s shares jump 3.5% over the current price of $31.13 to surpass the average breakeven point at $32.23 by expiration day. Big Lots is slated to report third-quarter earnings ahead of the opening bell on December 2, 2010.
SWN – Southwestern Energy Co. – Shares of the independent energy company engaged in natural gas and crude oil exploration, development and production in the U.S. increased as much as 5.7% this morning to touch an intraday high of $35.78. SWN’s shares may have been helped higher by news that EXCO Resources’ CEO, Douglas H. Miller, proposed to the firm’s Board of Directors intentions to purchase all outstanding shares of the company he does not already own for $20.50 a share in cash. Shares are currently up 4.75% to stand at $35.45 as of 11:40 am in New York. Options traders hoping to see Southwestern’s shares continue higher in the next several months picked up calls on the stock today. Near-term bulls purchased approximately 1,100 calls at the November $36 strike for an average premium of $0.81 each. Call buyers at this strike make money if SWN’s shares rally another 3.8% over the current price of $35.45 to surpass the average breakeven point on the calls at $36.81 by November expiration day. Medium-term optimists appear to have purchased the majority of some 4,100 calls that changed hands at the January 2011 $38 strike for an average premium of $1.33 a-pop. Investors long the calls profit if shares jump 10.9% to trade above the average breakeven price of $39.33 by January 2011 expiration. Southwestern’s overall reading of options implied volatility is up 9.5% to stand at 34.26% as of 11:45 am.
MRVL – Marvell Technology Group, Ltd. – Investors flocked to Marvell Technology Group right out of the gate this morning to place near-term bullish bets on the chip maker. Shares rallied 2.4% earlier in the session to hit an intraday high of $19.74, but have since pared gains to stand flat on the day at $19.28 as of 10:48 am in New York. Options traders hoping to see Marvell’s shares rise ahead of expiration day this month picked up approximately 2,600 calls at the November $20 strike for an average premium of $0.58 each. Call buyers at this strike make money if MRVL’s shares rally 6.7% over the current price of $19.28 to surpass the average breakeven point at $20.58 by November expiration. Optimism spread to the higher November $21 strike where investors scooped up 4,100 calls for an average premium of $0.27 apiece. Options traders holding these contracts are poised to profit should the price of the underlying shares surge 10.3% and exceed the average breakeven price of $21.27 by expiration day. Finally, bullish players purchased roughly 1,000 calls at the December $22 strike for an average premium of $0.40 a-pop. Investors long the December $22 strike calls stand ready to profit should shares jump 16.2% to trade above $22.40 ahead of expiration day in December. Marvell Technology Group is scheduled to report third-quarter earnings after the final bell on December 2, 2010. The rise in demand for call options on the stock this morning helped the overall reading of options implied volatility on MRVL increase 7.1% to 44.26% by 10:55 am.
XRT – SPDR S&P Retail ETF – The retail ETF popped up on our ‘most active by options volume’ market scanner within the first five minutes of the trading session today after one strategist picked up a sizeable debit put spread in the December contract. Shares of the XRT, an exchange-traded fund designed to replicate the performance of the S&P Retail Select Industry Index, are currently up 0.10% at $43.66 as of 10:55 am in New York trading. The put player appears to have purchased 11,600 puts at the December $43 strike for a premium of $1.44 each in order to sell the same number of puts at the lower December $39 strike at a premium of $0.42 apiece. The net cost of the transaction amounts to $1.02 per contract and positions the investor to profit – or realize downside protection – should XRT shares decline 3.85% from the current price of $43.66 to breach the effective breakeven point at $41.98 by expiration day. Maximum potential profits of $2.98 per contract are available to the trader in the event that shares of the fund plunge 10.7% lower to trade below $39.00 by expiration day in the final month of 2010.
FTNT – Fortinet, Inc. – Shares of the provider of network security appliances and Unified Threat Management network security solutions to enterprises, service providers and government entities around the globe surged as much as 22.6% at the start of the session to reach an intraday and new 52-week high of $36.77 on reports the firm was approached by IBM six to eight weeks ago to commence takeover talks. The talks with International Business Machines, the world’s largest provider of computer services, may now be at an advanced stage. Fortinet’s shares are currently up 15.5% to stand at $34.66 as of 11:55 am in New York trading. Some investors are utilizing out-of-the-money call options on Fortinet in order to position for shares to continue higher should confirmed terms of a takeover bid hit the airwaves in the next few weeks. These traders picked up more than 1,250 calls at the November $35 strike for an average premium of $1.83 each. Call buyers make money if FTNT shares rally another 6.25% over the current price of $34.66 to exceed the average breakeven point at $36.83 by expiration day this month. Fortinet’s overall reading of options implied volatility shot up 23.6% to 57.98% just before 12:00 pm.
