Monday Options Brief: CMCSK, XLI, CATM, AXL & ASML

by: Interactive Brokers

Comcast Corp. Class A Special (CMCSK)A short strangle enacted on the provider of cable and communications services today implies one options strategist sees shares of CMCSK trading within a specified range through June expiration. As of 12:20 pm (NYSE:ET), shares of the underlying stock are up 0.50% to $16.32. The strangle-strategist shed 2,000 calls at the June $17 strike for a premium of $0.30 each in combination with the sale of 2,000 puts at the June $15 strike for an average premium of $0.375 apiece. Gross premium pocketed on the transaction amounts to $0.675 per contract. The investor keeps the full amount of premium as long as CMCSK shares trade within the boundaries of the strike prices described through expiration. The short stance taken in both call and put options on the stock expose the strangler to losses if shares rally above the upper breakeven price of $17.675, or if shares slip beneath the lower breakeven point at $14.325, by expiration day in June.

Industrial Select Sector SPDR (NYSEARCA:XLI) Shares of the XLI, an exchange-traded fund designed to provide investment results that correspond to the price and yield performance of the Industrial Select Sector of the S&P 500 Index, are trading 0.25% lower at $29.35 just before 12:30 pm (ET). One pessimistic options trader populated the fund with bearish sentiment by purchasing a plain-vanilla debit put spread in the September contract. The investor picked up 4,000 puts at the September $28 strike for a premium of $2.05 each, and sold the same number of puts at the lower September $23 strike for $0.80 apiece. The net cost of the bearish spread amounts to $1.25 per contract, thus yielding maximum potential profits of $3.75 to the responsible party if shares of the fund fall more than 21.6% to $23.00 by expiration. The trader starts to make money as long as shares decline 8.85% from the current value to breach the average breakeven price of $26.75 by expiration day in September.

Cardtronics, Inc. (NASDAQ:CATM) The implementation of a ratio call spread on the provider of automated teller machine (ATM) management and equipment-related services indicates one options players is expecting Cardtronics’ shares to rally significantly by December expiration. CATM’s shares are currently up 2.25% to $13.25 as of 12:00 pm (ET). The bullish investor responsible for the ratio spread utilized a total of 6,000 call options in the transaction, which is nearly three times greater than total existing open interest on the stock of 2,079 contracts. The trader purchased 2,000 in-the-money calls at the December $12.5 strike for a premium of $3.40 apiece, and sold 4,000 calls at the higher December $17.5 strike for $1.50 in premium each. Net premium paid for the spread amounts to just $0.40 per contract. The investor makes money above the effective breakeven price of $12.90, and stands ready to accrue maximum potential profits of $4.60 per contract should shares of the underlying stock surge 32% up from the current price of $13.25 to settle at $17.50 by expiration day in December.

American Axle & Manufacturing Holdings, Inc. (NYSE:AXL)Bullish options players dominated trading activity on auto parts supplier, American Axle & Manufacturing Holdings, Inc., in the first half of the trading session. Shares of the underlying stock are up 2.30% to $8.45 as of 11:55 am (ET). Investors expecting AXL shares to appreciate ahead of June expiration purchased at least 4,000 calls at the June $10 strike for an average premium of $0.335 per contract. Call-buyers make money if the auto parts manufacturer’s shares rally at least 22.30% over the current price to exceed the average breakeven point to the upside at $10.335 by expiration day next month.

ASML Holding NV (NASDAQ:ASML) The provider of advanced technology systems for the semiconductor industry enticed near-term optimistic options players during the first trading day of this week despite the 0.90% decline in the price of the underlying stock to $28.64 as of 12:15 pm (ET). Plain-vanilla debit call spreads transacted in the June contract indicate one or more traders expect ASML shares to rally ahead of expiration day. Roughly 6,000 in-the-money calls were picked up at the June $27.5 strike for an average premium of $2.07 apiece, and spread against the sale of about 6,000 calls at the higher June $30 strike for an average premium of $0.73 each. The net cost of the bullish spread amounts to $1.34 per contract. The transaction yields maximum potential profits of $1.16 per contract to the trader or traders long the debit spread if shares of the underlying stock rally 4.75% to exceed $30.00 by expiration day in June.