Heavy Volume In Intel Options As Shares Rally To Highest Since August

Heavy volume in Intel options as shares rally to highest since August

Today’s tickers: INTC, LRCX & IRM

INTC – Intel Corp. – Shares in Intel Corp. are bucking the trend on Monday, up better than 4.0% at $25.27 as of midday in New York amid a weak start to the trading week for U.S. equities. The chipmaker was raised to ‘Outperform’ from ‘Market Perform’ with a target share price of $28.00 from $23.00 at FBR Capital today. Bullish trades initiated on Intel on Friday are generating gains for some strategists today, with premium on weekly calls up sharply with the move in the price of the underlying stock. It looks like more than 7,000 of the Jun 07 ’13 $25 strike calls were purchased on Friday for an average premium of $0.11 each. Today, these contracts are changing hands for $0.41 each, a near four-fold increase over the weekend. Traders positioning for the stock to extend gains this week snapped up around 1,000 calls at the Jun 07 ’13 $26 strike for an average premium of $0.06 apiece. The bullish bet makes money at expiration as long as shares in INTC rally another 3.1% to exceed the average breakeven price of $26.06. Shares in Intel are up roughly 20% since the start of 2013.

LRCX – Lam Research Corp. – Bullish options are changing hands on Lam Research Corp. today, with shares in the name trading up as much as 5.0% to a new two-year high of $49.13 after analysts at Needham reiterated a ‘Buy’ rating on the stock and raised their price target to $60.00 from $53.00. Traders placing bullish bets on LRCX looked to the front month calls, buying roughly 1,000 of the Jun $50 strike calls for an average premium of $0.67 each. The trade makes money if shares in Lam Research rally another 3.0% to trade above $50.67 by June expiration. Meanwhile, cheap upside calls changing hands at the Jul $60 strike look for the price of the underlying to post double-digit percentage gains during the next six weeks. It looks like one trader picked up approximately 700 of the Jul $60 calls for a premium of $0.05 each. The position makes money at expiration if shares in Lam Research surge 22% over today’s high of $49.13 to top $60.05. Trading traffic in LRCX options today has pushed volume to 3,075 contracts as of the time of this writing, roughly five times the stock’s average daily volume, and lifted the call/put ratio to 5.7 in early afternoon trade.

IRM – Iron Mountain, Inc. – Shares in information protection and storage services provider, Iron Mountain, Inc., are moving lower today, down as much as 3.5% to $34.57 during the first half of the session. Options changing hands on Iron Mountain, however, look for the price of the underlying to rebound in the near term. The most actively traded contracts on IRM today are the Jun $37.5 strike calls, with upwards of 8,000 lots in play versus open interest of 653 contracts. The bulk of the volume printed in two sizable blocks, it looks like one block of 3,550 calls was purchased for a premium of $0.35 each within the first 10 minutes of the session this morning, while a second trade of 3,325 calls was purchased at a premium of $0.40 each just after 11:00 a.m. ET. The upside calls look for shares in Iron Mountain to rebound in the near term, and start making money if shares in the name rally more than 8.0% over current levels by expiration in a couple of weeks.