Wednesday Options Brief: SFLY, SU & SHS

Includes: SFLY, SHS, SU
by: Interactive Brokers

SFLY - Shutterfly, Inc. - Options volume on Shutterfly jumped this morning and shares in the online photo-sharing services provider jumped nearly 20% to a new 52-week high of $40.20 after the company posted higher-than-expected fourth-quarter revenue and forecast annual sales above average analyst expectations. Traders positioning for shares in Shutterfly to extend gains in the near term snapped up February expiry calls on the stock today. Upwards of 1,100 calls have changed hands at both the Feb. $40 and $42.5 striking prices as of 11:40 a.m. ET, and it looks like much of the volume was purchased in the early going at average premiums of $0.96 and $0.39 apiece, respectively. Call buyers may profit at expiration next week if SFLY's shares increase another 1.9% and 6.7% to exceed average breakeven prices of $40.96 and $42.89. Bullish positions established ahead of Shutterfly's fourth-quarter earnings report fetched hefty overnight paper profits for some options players today. Traders who yesterday purchased around 300 calls at the Feb. $32.5 strike for an average premium of $1.88 each, today find these contracts have quadrupled in value, changing hands at a premium of $7.60 apiece, just before midday in New York. Roughly 250 calls were picked up at the Feb. $37.5 strike on Tuesday for an average premium of $0.37 per contract. Traders long the $37.5 strike call options today hold contracts that have increased eight-fold overnight to $3.10 each as of last check on Wednesday morning at 11:50 a.m. ET. Overall options volume on Shutterfly is approaching 10,600 contracts, a big jump versus the stock's average daily options volume of around 1,140 contracts.

SU - Suncor, Inc. - Shares in Suncor, the largest Canadian energy company by market value, dropped 5.7% today to $32.55 after the company posted a first quarter loss on Tuesday after the close. Options volume on Suncor today is nearly five times greater than average, with more than 25,500 contracts in play on the stock versus average daily options volume of 5,670 contracts. The bulk of the volume is changing hands at the Mar. $34 strike where approximately 19,000 call options traded against open interest of 5,346 contracts this morning. Time and sales data suggests most of these contracts sold for an average premium of $0.42 apiece. Call sellers walk away with the full $0.42 premium per contract in hand as long as shares in Suncor fail to recover above $34.00 at expiration next month.

SHS - Sauer-Danfoss, Inc. - The maker of engineered hydraulic, electric and electric systems and components used primarily in mobile equipment appeared on our 'hot by options volume' market scanner this morning after a sizable block of calls printed in the March expiry options. Shares in Sauer-Danfoss are up 0.90% at $54.26 as of midday in New York trading. The trader responsible for the single-largest trade in SHS options today may be positioning for shares in the name to rally following the company's fourth-quarter earnings report on February 20th, two weeks from today. The strategist appears to have purchased 3,000 calls at the Mar. $55 strike for a premium of $0.95 per contract. The bullish position makes money if shares in Sauer-Danfoss rise 3.1% to surpass the effective breakeven price of $55.95 by March expiration. The price of the underlying shares, up more than 40% since the end of November, last traded above $55.95 in February 2012.