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DEO - Diageo PLC - A burst of options activity on the distributor of premium alcohol brands near the start of a shortened U.S. trading week pushed Diageo onto our 'hot by options volume' market scanner this morning. Call and put buying on the name suggests one or more traders are positioning for volatility in the price of DEO shares ahead of the company's fourth-quarter earnings report on January 31st. Shares in Diageo are currently down 0.90% on the session to stand at $116.61 as of 10:55 a.m. ET in New York trading. Upside call buyers looking for shares in the name rise substantially during the next few weeks snapped up more than 580 calls at the Feb. $120 strike for an average premium of $0.70 apiece. Traders long the $120 calls stand ready to profit at expiration next month should DEO shares rally 3.5% to top $120.70. February expiry put options are changing hands on Diageo today, as well. Traders bracing for shares in the distributor of Johnnie Walker to potentially decline in the weeks ahead picked up around 340 puts at the Feb. $115 strike and some 540 puts at the Feb. $110 strike at average premiums of $1.35 and $0.45 apiece, respectively. Buyers of the $110 strike puts are positioned to profit in the event of a more than 6.0% dip in the price of the underlying to $109.55 by February expiration.

TRV - Travelers Companies, Inc. - Shares in the insurer increased the most in the Dow Jones Industrial Average on Tuesday morning, rallying nearly 5% to a new all-time high of $80.00, after the company posted better-than-expected fourth-quarter earnings ahead of the opening bell. TRV's shares are currently off their highest level of the session, up 2.6% at $78.28 as of 10:50 a.m. ET. Trading traffic in February expiry calls in the early going suggests some traders are positioning for Travelers' shares to extend gains in the near term. Bullish strategists appear to have purchased upwards of 325 calls at the Feb. $80 strike for an average premium of $0.89 apiece, and another 380 calls at the Feb. $83.5 strike at an average premium of $0.18 each. Call buyers stand ready to profit at expiration next month should TRV shares rally another 3.3% or 5.6% over the current price to surpass average breakeven prices of $80.89 and $82.68, respectively.

TSS - Total System Services, Inc. - Options on the global payment solutions provider are active ahead of the company's fourth-quarter earnings report after the close. Overall options volume in play on the stock today, currently at 2,997 contracts as of 12:30 p.m. ET, is well above the average daily options volume of 142 contracts on TSS, and exceeds total open interest in the name of 2,378 lots. Shares in Total System Services are currently up 0.3% at $23.69 in early afternoon trading. Upside calls saw the most traffic during the first half of the session, suggesting some strategists anticipate a near-term pop in the price of the underlying. Upwards of 2,900 calls have changed hands at the Feb. $25 strike today, versus previously existing open interest of just 289 contracts. It looks like most of the calls were purchased in the early going for an average premium of $0.18 apiece. Traders long the calls may profit at February expiration should shares in TSS rally 6.3% to $25.18, the highest level since 2008.

Source: Tuesday Options Brief: DEO, TRV & TSS