Monday Options Update: CROX, IPG, ELN, & WFC,

Crocs, Inc. (CROX) – Investors of the footwear and apparel products company have seen shares explode by 31% to $3.02 and can now say ‘see you later alligator’ to the 52-week low for the stock of just 79 cents per share. More than half of the 48,131 contracts of existing open interest on CROX exchanged hands today as investors traded more than 26,700 lots by lunchtime. Traders heavily favored call options which were traded more than 20 times for each put in action. Bullish croc-stock-fans bought more than 4,300 calls at the June 4.0 strike price for an average premium of 52 cents apiece. Shares would need to rise by about 50% from the current price to the breakeven point at $4.52 in order for individuals to profit by expiration. Optimism spread as high as the June 5.0 strike price where about 3,000 calls were traded at a cost of 41 cents per contract. Over the next couple of months, shares would need to more than double to breach the breakeven share price of $5.41 by expiration. Option implied volatility has skyrocketed to 215% up from the closing value recorded on Friday of 161%. The footwear retailer is scheduled to release its first-quarter earnings on this Thursday.

Interpublic Group of Companies, Inc. (IPG) – The advertising and marketing services company has experienced a 3% share price decline to stand at $6.12. Despite the bearish move in price, option traders were observed getting bullish on the stock in the June contract. At the June 7.5 strike price some 1,300 calls were picked up for an average premium of 25 cents apiece. However, the big-boys looked to the June 10 strike and bought 10,000 calls for about 10 cents per contract. Shares would need to rise by 65% from the current price in order to breach the breakeven point on the trade of $10.10 by expiration.

Elan Corporation PLC (ELN) - The neuroscience-based biotechnology company appeared on our ‘hot by options volume’ market scanner this morning amid unconfirmed takeover speculation as well as a steep share price rally of more than 16.5% to $6.88. The bullish movement in the share price has attracted fresh call buying interest on ELN and the call-to-put ratio of more than 21-to-1 indicates that investors have traded more than 21 call options for each put option in action today. At the near-term May 7.0 strike price bullish investors looking for a continued rise in shares picked up more than 8,600 calls for an average premium of 30 cents each. More optimistic traders bought some 1,100 calls at the May 8.0 strike for about 19 cents per contract. Option implied volatility has exploded upwards as high as 100% from the reading of 76% taken on Friday, although currently volatility has come off slightly to stand at the current value of 97%.

Wells Fargo & Co. (WFC) – Shares have jumped more than 8% to $21.19 today amid gains experienced by many other members of the TARP-gang ahead of the stress-test results due out this Thursday. While option investors are very active on WFC today, put-selling in the near-term May contract caught our attention early on in the trading day. About 20 minutes after the bell rang this morning one investor looks to have shed some 21,000 puts at the May 14 strike price for about 25 cents apiece. Perhaps this individual does not feel the need for downside protection so far out-of-the-money and today he is taking whatever premium he can get ahead of May expiration in just a few weeks.