(
SU) –
Shares of Canada's largest oil company are trading 2.75% lower to
$31.84 today after the firm posted fourth-quarter profits of $0.21 per
share, which came in below average analyst expectations of $0.39 a
share. Investors enacted interesting options trades in the near-term
February contract. Traders expecting Suncor's shares to rebound ahead
of expiration day sold straddles at the February $33 strike. It looks
like 1,000 calls were sold at the February $33 strike for a premium of
$0.46 each, in combination with the sale of 1,000 in-the-money puts at
the same strike for $1.73 apiece. Straddle-sellers pocket a gross
premium of $2.19 per contract on the trade, and keep the full premium
if shares settle at $33.00 by February expiration. Investors short the
straddle are exposed to losses, however, should shares swing above the
upper breakeven price of $35.19, or if the stock falls below the lower
breakeven point at $30.81 ahead of expiration day. Option implied
volatility decreased by 8% post-earnings.
Polo Ralph Lauren Corp. (RL) –
American athletes kicked off the opening ceremony for this year's
Winter Olympics in Vancouver decked out in stylish, yet patriotic,
Ralph Lauren attire. The fashion company's shares enjoyed a 2.20% move
higher to $84.98 today, perhaps motivating the protective options
transaction observed in the March contract. A ratio put spread was
employed on RL today by an investor who is likely looking to protect
recent gains in the value of the underlying stock. The trader purchased
2,000 puts at the in-the-money March $85 strike for a premium of $4.40
apiece, spread against the sale of 4,000 puts at the lower March $80
strike for $2.35 each. The investor pockets a net credit of $0.30 per
contract on the trade, which he keeps in the event shares remain above
the lower $80.00 strike at expiration. Below the upper $85.00 strike,
the long leg of the put combination yields penny-for-penny profits to a
maximum of $5.00. Erosion of those gains starts below $80.00. The 6,000
option contracts employed in the spread comprise nearly 25% of the
stock's total existing open interest of 24,552 lots. The trader
benefits from a move higher in the price of the underlying, but is also
protected in case shares shift lower in the next couple of months.
GigaMedia Limited (GIGM) –
Entertainment software development company, GigaMedia Limited,
attracted a barrage of bullish options players today with shares up
6.90% at times during the session to an intraday high of $2.94.
Investors positioning for continued upward momentum in the value of the
underlying stock purchased more than 12,400 calls at the now
in-the-money July $2.5 strike for an average premium of $0.68 per
contract. GIGM call buyers stand ready to accumulate profits if shares
rally 8.15% above the day's high of $2.94 to surpass the average
breakeven price of $3.18 by expiration day in July. Options investors
exchanged 29,500 contracts on GigaMedia by noontime on the East Coast,
which represent 53.50% of the stock's total existing open interest of
55,057 lots. The sharp surge in demand for options on GIGM lifted
options implied volatility 26.15% to 72.03%.
Freeport-McMoRan Copper & Gold, Inc. (FCX) –
Mining firm, Freeport-McMoRan, received a ‘buy' recommendation with a
target share price of $95.00 at Citigroup today. FCX shares are up
0.85% to $72.18 as of 12:15 pm (EDT). Despite the ‘buy' rating options
traders continue to utilize cautious strategies on the stock.
