Wednesday Options Update: SLAB, QLGC, BYD & INTC

Silicon Laboratories Inc. (SLAB) –– The provider of mixed-signal integrated circuits has surged by more than 10% to stand at $32.04 per share after the company reported sales and earnings that exceeded analysts’ expectations. The Austin, Texas-based SLAB announced earnings of 22 cents per share which trumped the average consensus of approximately 13 cents. Investors got bullish on the stock by picking up more than 1,600 calls at the June 35 strike price for an average premium of 67 cents apiece. Shares would need to rally by an additional 11% to the breakeven point at $35.67 in order for bullish traders to profit by expiration in June. SLAB appeared on our ‘top option implied volatility % losers’ market scanner as volatility on the stock dissipated from 50% yesterday to 36% following the firm’s positive earnings results.

QLogic Corporation (QLGC) – The designer and developer of storage network infrastructure components has experienced a share price rally of more than 9% to $14.61 ahead of earnings expected for release tomorrow afternoon. One news source reported rumors of a potential takeover of the company by EMC Corporation which may have contributed to the surge in option implied volatility on the stock which is up to 61% from the reading of 53% yesterday. Option traders jumped into bullish calls in the May contract by purchasing more than 6,300 contracts at the 15.0 strike for an average premium of 37 cents apiece. In order to profit from the call options by expiration, shares need only increase by another 5% from the current price to the breakeven point at $15.37.

Boyd Gaming Corporation (BYD) – Shares of the gaming company, which owns some 15 casinos, attracted bullish investors who were eager to play with options on the stock. BYD appeared on our ‘hot by options volume’ market scanner amid a more than 8% share price rally to $8.70. Individuals looking to get bullish heavily favored the May 10 strike price where more than 11,900 calls traded hands with approximately 7,500 of the contracts purchased for an average premium of 50 cents apiece. The call-to-put ratio currently stands at more than 18-to-1 indicating that 18 call options were traded for every single put in action. Shares would need to continue to climb by about 15% from the current price in order for the May 10 calls to land in-the-money by expiration.

Intel Corporation (INTC) – The semiconductor chip maker has experienced a share price rally of more than 1.5% to $15.32. We observed one options investor who is hoping to see shares continue to climb through expiration in June as he employed the covered call strategy. It appears that this individual bought shares of Intel and simultaneously sold 15,000 calls at the June 17 strike price for a premium of 24 cents per contract. This transaction provides an exit point if shares rise through $17.00 by expiration and yields the trader gains of about 11% on the stock in addition to the 24 cent premium enjoyed today.