Research in Motion Limited (RIMM) – Optimistic options players populated the Blackberry maker’s August contract, selling puts and buying calls to prepare for the price of the underlying stock to continue climbing ahead of expiration day next month. RIMM’s shares rallied as much as 4.53% today to an intraday high of $55.59 on reports the Canadian company will reveal its new touch screen BlackBerry in New York next Tuesday. Investors are chomping at the bit to see if the BlackBerry 9800 can give iPhone maker, Apple, a run for its money – or market share. RIMM’s shares have bounced up off their early-July lows, but the recovery could be short-lived if the 9800 turns out to be a disappointment. Traders hoping to see a successful launch of the touch screen device, and subsequent share price appreciation, employed bullish strategies. Investors picked up at least 3,800 calls at the now in-the-money August $55 strike for an average premium of $2.15 apiece. Buying interest spread to the higher August $57.5 strike where 3,900 calls were purchased at an average premium of $1.16 each. Uber-bulls bought roughly 2,900 call options at the August $60 strike for an average premium of $0.68 a-pop. Investors long the August $60 strike calls are poised to profit should RIMM’s shares surge 9.25% to surpass the average breakeven price of $60.68 by August expiration. The sale of out-of-the-money put options is another bullish signal investors are itching for the current rally to continue. Traders sold some 2,000 puts at the August $50 strike for an average premium of $0.55 each, and shed another 5,200 puts at the higher August $52.5 strike for an average premium of $1.21 apiece. In total, options players exchanged more than 91,300 contracts on Research in Motion by 3:40 pm ET. Options implied volatility on RIMM is up 3.4% to 43.85% ahead of the final bell.
Intuit Inc. (INTU) – The provider of business and financial management solutions popped up on our ‘hot by options volume’ market scanner late in the trading session after one options strategist initiated a bearish transaction in the October contract. Intuit’s shares are down slightly by 0.15% to stand at $39.50 as of 3:15 pm ET. It looks like the trader bought a plain-vanilla debit put spread, buying 6,346 puts at the October $37.5 strike for a premium of $1.08 each, and selling the same number of puts at the lower October $34 strike for premium of $0.36 apiece. The net cost of establishing the spread amounts to $0.72 per contract. Intuit’s shares must decline 6.9% from the current price in order for the investor to breakeven on the trade at a share price of $36.78. The put spreader may walk away with maximum potential profits of $2.78 per contract if Intuit’s shares tumble more than 13.9% lower to trade below $34.00 by October expiration. The overall reading of options implied volatility on INTU is higher by 5.8% to stand at 26.03% in the final hour of the trading session.
Las Vegas Sands Corp. (LVS) – Shares of the owner and operator of casino resorts increased as much as 6.40% this afternoon to secure an intraday high of $26.90 following the firm’s better-than-expected second-quarter earnings report released ahead of the opening bell this morning. The casino company posted profits of $0.17 a share, excluding some items, which blew straight past analysts’ consensus estimate of $0.09 a share. Options investors responded to the positive report by initiating various near-term bullish trading strategies on the stock. Optimistic individuals expecting shares to continue to rally ahead of August expiration purchased 1,800 in-the-money calls at the August $26 strike for an average premium of $1.36 apiece. In-the-money call buyers make money as long as Las Vegas Sands’ shares increase 1.70% over today’s high of $26.90 to surpass the average breakeven point at $27.36 by expiration. Investors hoping to see LVS’s shares reach a new 52-week high in the next few weeks scooped up approximately 3,700 calls at the higher August $27 strike for an average premium of $1.03 a-pop. Investors long the August $27 strike calls start to accumulate profits should shares of the underlying stock surge 4.20%, break through the current 52-week high of $27.84, and trade above the average breakeven price of $28.03 ahead of next month’s expiration day. The sale of 1,000 puts at the August $27 strike for an average premium of $1.63 each is also a bullish signal. Perhaps put sellers are ditching previously established bearish positions. Otherwise, traders may be selling the puts outright because they expect shares to trade above $27.00 by August expiration. The sale of the contracts indicates some investors are willing to have shares of the underlying stock put to them at an effective price of $25.37 each should the puts land in-the-money at expiration. The overall reading of options implied volatility on Las Vegas Sands Corp. declined 12.3% to 49.63% following earnings.
Range Resources Corp. (RRC) – Frenzied options activity on the Texas-based independent oil and gas exploration and development company ensued right out of the gate this morning with shares of the underlying stock rallying 2.65% to $38.22 by 12:20 pm ET. Range Resources’ shares fell sharply yesterday after the firm posted weaker-than-expected earnings for the second quarter and said it plans to increase spending in 2010. An analyst at Canaccord Genuity Corp. cut RRC to ‘hold’ from ‘buy’ and assigned its shares a 12-month target price of $41.00 this morning. However, a number of options investors populating the August contract purchased calls to position for continued bullish movement in the price of RRC’s shares. The call buying action may be taken as a sign that some investors are not expecting Range Resources’ shares to remain depressed through August expiration. Optimists picked up approximately 1,600 calls at the August $39 strike for an average premium of $1.03 apiece. Investors long the calls are poised to profit should shares increase 4.7% over the current price of $38.22 to surpass the average breakeven point to the upside at $40.03 by expiration day. Trading traffic in near-term call options is heaviest at the higher August $40 strike where more than 13,000 contracts changed hands by 12:25 pm ET. It looks like bulls purchased roughly 8,800 of the August $40 strike calls for an average premium of $0.78 a-pop. Call buyers at this strike make money if, by expiration, RRC’s shares rally 6.7% to trade above the average breakeven price of $40.78. The surge in demand for option contracts on Range Resources Corp. fueled a 10.2% increase in the stock’s overall reading of options implied volatility to 44.02.
Medco Health Solutions Inc. (MHS) – Near-term bearish options investors honed in on August contract puts this morning with shares of the healthcare company trading 3.95% lower on the day to trade at $47.34 as of 11:10 am ET. Medco’s shares fell as much as 5.2% earlier in the session to touch down at a new 52-week low of $46.70. Shares have declined more than 19.2% since July 15, 2010, when the stock traded at a high of $57.82, to reach today’s low point of $46.70. Investors expecting the price of the underlying shares to head lower ahead of expiration day next month purchased approximately 6,800 puts at the August $45 strike for an average premium of $0.75 per contract. Put buyers are positioned to make money should Medco’s shares fall another 6.5% from the current price of $47.34 to breach the effective breakeven point at $44.25 by expiration. The demand for put options on MHS helped lift the overall reading of options implied volatility on the stock 15.5% to 30.74% by 11:20 am ET.
Hospira, Inc. (HSP) – The sharp pullback in the price of Hospira’s shares today attracted the attention of contrarian options investors who appear to be initiating bullish stances on the stock in order to reel in profits should the price of the underlying stock rebound by September expiration. Shares of the pharmaceuticals firm declined as much as 9.7% this morning to secure an intraday low of $51.30 following the release of its second-quarter earnings report. HSP posted net income, excluding one-time items, of $0.86 a share, which beat average analyst expectations of $0.79 a share. However, the firm did not change its 2010 earnings forecast and the price of its shares plunged on concerns performance could be weaker in the second half of the year. Hospira’s shares are currently down 7.00% to stand at $52.83 as of 11:50 am ET. Contrarians refusing to buy into the pessimism just yet opted instead to buy call options in the September contract. Investors hoping to see shares rally in the next couple of months purchased approximately 2,500 calls at the September $55 strike for an average premium of $1.25 per contract. Call buyers are positioned to profit should Hospira’s shares surge 6.5% over the current price of $52.83 to surpass the average breakeven point to the upside at $56.25 by expiration day. We note that HSP’s shares were trading as high as $58.45 yesterday.
Chico’s FAS, Inc. (CHS) – Optimistic options players are buying calls on the national specialty retailer of private branded women’s clothing and accessories today perhaps to get in on the ground floor of what could wind up being a significant rebound in the price of its shares. CHS’s shares plunged 12.7% on Tuesday from an intraday high of $10.49 to an intraday low of $9.16 after it was added to Goldman Sachs’ conviction sell list. Shares of the retailer inched slightly higher by 0.10% today to trade at $9.41 by 12:40 pm ET. Investors itching for a near-term resurgence in the value of CHS shares scooped up approximately 2,400 calls at the August $10 strike for an average premium of $0.29 apiece. Call buyers make money as long as the clothing retailer’s shares surge 9.35% over the current price of $9.41 to exceed the average breakeven point on the calls at $10.29 ahead of August expiration.