Thursday Options Brief: SAM, ALLT & UNG

Includes: ALLT, SAM, UNG
by: Interactive Brokers

SAM - Boston Beer Company, Inc. - Trading traffic in Boston Beer Co. options is heavier than usual today, with shares in the craft brewer rallying as much as 17.3% to an all-time high of $134.00 at the start of the session after the maker of Samuel Adams beers raised full-year earnings estimates on stronger-than-anticipated demand for cider and seasonal brews. SAM's shares, currently up 15.2% at $131.61, have increased roughly 30% since this time last year. Options volume on SAM is approaching 1,000 contracts in early-afternoon trading, versus the stock's average daily options volume of around 80 contracts. SAM calls are more active than puts, with the call-to-put ratio hovering around 1.4 as of 1:30 p.m. ET. Front-month upside calls attracted the most volume, with the Dec. $135 strike call changing hands 217 times thus far today, and the $140 strike call seeing 112 contracts in play. Time and sales on the $135 and $140 strike calls indicates both buyers and sellers are driving fresh interest in the contracts today.

ALLT - Allot Communications, Ltd. - Shares in the provider of bandwidth consumption solutions fell more than 17% today to $16.62 after the stock was cut to 'hold' from 'buy' at Wunderlich Securities, and put activity on the name this morning suggests some traders are preparing for the price of the underlying to extend losses in the New Year. Options volume on Allot Communications is heaviest in the Jan. 2013 $17.5 strike put where some 670 contracts have changed hands versus open interest of 63 positions. It looks like the bulk of the volume was purchased for an average premium of $1.57 apiece, thus positioning put buyers to profit should ALLT's shares decline another 9.5% from the current price of $17.66 to breach the average breakeven price of $15.93 at expiration next month.

UNG - United States Natural Gas Fund, LP - Bearish put buying on the U.S. Natural Gas Fund this morning looks for shares in the Fund that tracks the performance of natural gas to continue to decline through the end of the trading week. UNG shares, down 10% since last Friday, slipped 2.1% lower this afternoon to stand at $18.93. Traders positioning for shares to extend losses tomorrow snapped up more than 5,000 puts at the Dec. 14 '12 $18.5 strike for an average premium of $0.05 apiece. Put buyers may profit at expiration should shares in the UNG drop 2.5% to settle below the breakeven price of $18.45. Interest is also building in the Dec. 14 '12 $19 strike puts, with upwards of 3,700 contracts in play versus open interest of 938 positions. It looks like most of the $19 strike put options were purchased earlier in the session for an average premium of $0.20 per contract. Options traders purchasing these weekly puts lose the full amount of premium paid for the contracts should shares settle above $19.00 at expiration.