Deutsche Bank AG (DB) – Heavy
trading traffic in Deutsche Bank put options this morning, one week
before the investment banking firm is scheduled to report fourth-quarter
earnings, may mean some traders are bracing for a pullback. Shares in
DB are currently up 0.40% to stand at $43.80 as of 12:40 p.m. in New
York. The single-largest put trade on the stock today was the purchase
of 9,500 puts at the April $40 strike for a premium of $2.45 each.
Though the put options were not marked as a spread against stock, it is
possible the put buyer seeks to protect the value of shares already in
his or her portfolio. Alternatively, the investor may be taking an
outright bearish stance on DB over the next three months. In the latter
scenario, the trader may profit if Deutsche Bank's shares plunge 14.3%
to breach the effective breakeven point at $37.55 at April expiration.
Meanwhile, the purchase of a 2,000-lot Mar. $35/$45 put spread at a net
premium of $2.75 per contract yields profits – or downside protection –
to its owner in the event of a 3.5% decline below the breakeven share
price of $42.25. Traders populating DB options are overwhelmingly
favoring puts over calls ahead of earnings, with today's put-call ratio
hovering just below 15.0 and overall put-call interest greater than 1.4.
athenahealth, Inc. (ATHN) – One
cautiously optimistic investor appears to have purchased a sizable
position in athenahealth put options this morning in order to hedge a
long position in the stock. Shares in the provider of cloud-based
business services for physician practices rose 1.05% to $57.91 this
afternoon, extending gains realized earlier in the week on the heels of a
new ‘Buy' rating at Sterne, Agee & Leach with a 12-month target
price of $71.00. It looks like the trader responsible for the
single-largest transaction in ATHN options purchased 58,000 shares at
$56.84 each this morning, hedging the long stock position with the
purchase of 2,000 protective put options at the Jun. $50 strike for a
premium of $4.30 apiece. The trader makes money on the way up by holding
shares in athenahealth, but limits potential losses should the price of
the underlying decline in the face of macroeconomic or company-specific
headwinds ahead of June expiration.
LSI Corp. (LSI) – The
chip maker's shares jumped in after-hours trading on Wednesday after
the Company forecast stronger-than-expected first-quarter performance.
Shares in LSI Corp. rallied 12.6% post-earnings to touch a new 52-week
high of $7.97 on Thursday. The stock has gained 32.0% since the start of
the New Year. Investors expecting LSI's shares to continue their
winning streak snapped up calls in the front month. Call volume is
heaviest at the Feb. $8.0 strike where more than 2,250 contracts changed
hands against open interest of just 25 positions. It looks like the
majority of these call options were purchased for an average premium of
$0.24 a-pop. Buyers of the calls stand prepared to profit in the event
that LSI Corp.'s shares rally another 3.4% to surpass the average
breakeven price of $8.24 at expiration next month. Finally, one investor
appears to have taken advantage of the huge run-up in LSI Corp. shares
during the month of January. It looks like the trader purchased 1,000
calls at the Feb. $6.0 strike for an average premium of $0.87 each back
on January 5. The sharp increase in the price of the underlying since
then has pushed premium required to purchase the Feb. $6.0 strike call
up to $2.00 per contract at last check.