Gannet Co., Inc. (NYSE:GCI) – The international news and information company, which publishes newspapers such as USA Today and operates a number of U.S. television stations, popped up on our scanners after large prints were detected in the October contract. It looks like one big options strategist expecting Gannet’s shares to rally enacted a bullish risk reversal on the stock. Gannet’s shares increased as much as 5.6% during the first half of the trading day to touch an intraday high of $13.47. The rally in the price of the underlying stock attracted the attention of plain-vanilla call buyers, as well. The bullish trader appears to have sold 11,000 puts at the October $10 strike at a premium of $0.10 each in order to buy the same number of calls at the October $16 strike for premium of $0.10 apiece. The investor essentially initiated a free trade and stands ready to accrue profits should Gannet’s shares surge 18.8% over today’s high of $13.47 to exceed $16.00 by October expiration day. The sale of the put options suggests the investor is willing to have 1,100,000 shares of the underlying stock put to him at $10.00 each in the event that shares plunge 25.75% lower and the puts land in-the-money at expiration. Other optimists purchased approximately 3,300 calls at the October $14 strike for an average premium of $0.70 each. These traders make money if GCI shares increase 9.1% to exceed the average breakeven price of $14.70 by expiration in October. Finally, bulls also picked up some 4,800 calls at the October $15 strike at an average premium of $0.33 a-pop. Call buyers at this strike profit if, by expiration, shares of the underlying stock jump 13.8% to surpass the breakeven price of $15.33. Options implied volatility on the stock is higher by 4% to stand at 53.14% as of 12:10 pm ET.
Anadarko Petroleum Corp. (NYSE:APC) – Frenzied call buyers flocked to the independent oil and gas exploration and production company today on speculation Australian firm, BHP Billiton Ltd., may be interested in buying the company. Anadarko’s shares surged 5.1% to an intraday high of $51.29 in morning trading. Investors populating APC options today flooded September contract calls to prepare for the price of the underlying stock to continue higher ahead of expiration. Shares are likely to extend gains if additional takeover rumors hit the air-waves or if an actual bid is announced. Trading traffic is heaviest in September $55 strike calls where more than 9,000 contracts changed hands by 12:20 pm ET. At least 4,000 of those call options were purchased at an average premium of $0.51 each. Call buyers also picked up around 2,000 calls for premium of $1.01 a-pop at the September $52.5 strike, and scooped up 2,900 now in-the-money calls at the September $50 strike for an average premium of $1.85 each. Bullish sentiment spread to the November $55 strike where traders purchased approximately 3,000 calls for an average premium of $2.29 each. Options implied volatility, helped higher by unconfirmed takeover chatter, rose 11.9% to 51.43% in early-afternoon trading.
Costco Wholesale Corp. (NASDAQ:COST) – September and October contract call options on the operator of membership warehouses are active this morning on news the firm’s total revenue for the four weeks ended August 29 increased 9% to $5.9 billion. Costco also revealed that stores open at least a year experienced a 7% increase in revenue in August, which handily beat average analyst expectations of a 4.2% increase. Shares of the wholesale club operator rallied as much as 1.8% in morning trading to secure an intraday high of $58.83. Some investors appear to be initiating bullish stances on the stock, while others may be taking profits off the table. Traders expecting COST’s shares to climb higher ahead of expiration in September picked up approximately 1,800 calls at the September $60 strike for an average premium of $0.29 each. Call buyers are poised to profit should Costco’s shares rally another 2.5% over today’s high of $58.83 to trade above the average breakeven price of $60.29 by expiration. The majority of the 1,800 in-the-money calls exchanged at the October $57.5 strike were sold at an average premium of $2.41 apiece. Upon examining open interest at that strike, it looks like call sellers may have originally purchased the contracts for an average premium of $1.38 back on August 30, 2010, ahead of the release of August sales data. In this scenario, investors enjoy average net profits of $1.03 per contract. All-in-all, options traders displayed a clear preference for COST calls today, as more than 7.7 calls changed hands for each single put option in action thus far in the session.
Goodyear Tire & Rubber Co. (NYSE:GT) – Shares of the manufacturer of tires and rubber products are up 6.40% at $10.14 as of 11:10 am ET after earlier increasing as much as 7.1% to touch an intraday high of $10.21. Options investors hoping to see Goodyear extend gains through expiration this month established bullish stances on the stock by purchasing at least 3,750 now in-the-money calls at the September $10 strike for an average premium of $0.31 apiece. Call buyers make money if GT’s shares exceed the average breakeven price of $10.31 by expiration day. Approximately 5,700 calls changed hands at the September $10 strike versus paltry previously existing open interest of 763 lots.