Today’s tickers: BBY, INTC & SUPN
BBY – Best Buy Co., Inc. – Options on Best Buy are active this morning ahead of the consumer electronics retailer’s second-quarter earnings report prior to the opening bell on Tuesday morning. Shares in BBY are rising ahead of earnings, up 1.75% at $30.90 as of 11:40 a.m. ET. Weekly call and put options are the most actively traded contracts by volume as of the time of this writing, with more puts changing hands than calls and the put/call ratio hovering around 2.75. Much of the trades initiated this morning appear to be near-term bullish on BBY, with put sellers stepping in as well as upside call buyers. It looks like more than 2,000 of the Aug 23 ’13 $28.5 strike puts were sold in the early going for a premium of $0.55 apiece, while roughly 2,000 of the Aug 23 ’13 $29 puts were sold at a premium of $0.70 each. Put sellers keep the premium received on the trades as long as shares in Best Buy settle above the $28.5 and $29 striking prices at expiration this week. The positions start to lose money, however, in the event that BBY shares decline nearly 10% from the current price to trade below effective breakeven points at $27.95 and $28.30, respectively, at expiration. Finally, options traders exchanged more than 2,400 of the Aug 23 ’13 $31 strike calls versus open interest of 152 contracts. Time and sales data suggests much of the volume was purchased for an average premium of $1.20 apiece, thus positioning buyers of the calls to profit should shares in Best Buy rally 4.2% over the current price of $30.90 to exceed an average breakeven point and new 52-week high of $32.20.
INTC – Intel Corporation – Shares in Intel are up the most in the Dow Jones Industrial Average on Monday, trading 3.1% higher on the session at $22.60 as of 11:30 a.m. ET, after the stock was upgraded to ‘Neutral’ from ‘Underweight’ with a 12-month target price of $22.00 at Piper Jaffray. The pop in shares of the chipmaker today appears to be benefiting traders who purchased weekly calls on the stock ahead of the weekend. Time and sales data indicates roughly 6,000 of the Aug 23 ’13 $22.5 strike calls were purchased on Friday for an average premium of $0.10 apiece. The rise in INTC shares this morning has roughly tripled the value of the contracts, with premium on the $22.5 calls rising up to $0.33 during morning trading. Traders may be taking profits today, with around 4,650 call options sold in the early going at an average premium of $0.30 each. Meanwhile, traders positioning for shares in Intel Corp to extend gains during the next four trading sessions snapped up more than 1,200 of the Aug 23 ’13 $23 strike calls for an average premium of $0.07 apiece. Traders long the $23 calls stand ready to profit at expiration should Intel’s shares rally another 2.1% over the current price of $22.60 to exceed the average breakeven point at $23.07.
SUPN – Supernus Pharmaceuticals, Inc. – Options on Supernus Pharmaceuticals are more active than usual on Monday, with shares in the name rising as much as 26.5% to $8.40 at the open after the company said it received final approval from the U.S. Food and Drug Administration for its extended-release epilepsy treatment, Trokendi XR. The stock is well off its highest levels of the session at present, but continues to trade up 13% on the day at $7.48 as of 11:20 a.m. ET. Trading in December expiry call options this morning suggests one or more traders are positioning for the price of the underlying to rally during the next four months. Upwards of 6,000 calls have changed hands at the Dec $8.0 strike thus far in the session, with volume continuing to tick higher. It looks like most of the calls were purchased for an average premium of $0.38 apiece, positioning buyers of the contracts to profit at December expiration in the event SUPN’s shares rally 12% over the current price of $7.48 to top the average breakeven point at $8.38.
Caitlin Duffy
Equity Options Analyst
