BP PLC (BP) – Far
out-of-the-money call options on BP saw heavier-than-usual activity on
Tuesday afternoon, with shares in the oil company trading up 1.3% at
$44.70 as of 12:30 p.m. in New York. Fresh prints in March expiry calls
may represent low-cost, low-probability bullish bets that shares in BP
will rally sharply by expiration. BP is scheduled to release
fourth-quarter earnings ahead of the opening bell on February 7, one
week from today. Options traders exchanged more than 3,000 call options
at the Mar. $49 strike against open interest of 621 contracts. The
majority of the calls appear to have been purchased for an average
premium of $0.22 apiece. Like-minded strategists snapped up some 3,500
calls at the higher Mar. $50 strike at an average premium of $0.11 each.
Investors long the calls may profit at expiration in March in the event
that BP's shares soar 10.1% and 12.1% to exceed average breakeven
prices of $49.22 and $50.11, respectively. Overall trading in BP options
players are heavily favoring calls on the name over puts today, with
more than 4.2 calls changing hands on the stock for each single put
option in early-afternoon trade.
RadioShack Corp. (RSH)– Shares
in consumer electronics retailer, RadioShack Corp., plunged 30.0% to
$7.15 on Tuesday after the Company revealed lower-than-anticipated
preliminary fourth-quarter earnings and suspended stock buybacks. The
breath-taking drop in the price of the underlying shares spurred some
options traders to ready themselves for a potential rebound in the next
few weeks. Call buyers looked to the Feb. $7.0, $8.0 and $9.0 strike
calls, buying around 1,600, 3,200 and 235 contracts at each strike,
respectively, this morning. Investors long the calls may have picked up
the contracts at bargain-level prices should shares in RadioShack
recover in the near term. For example, traders long the Feb. $8.0 strike
calls paid an average premium of $0.23 per contract, and may profit at
February expiration if shares in RSH surge 15.1% off their $7.15
intraday low to surpass the average breakeven price of $8.23.
Fourth-quarter results from RadioShack are expected out on February 21
after the close.
FMC Technologies, Inc.