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Gymboree Corp. (NASDAQ:GYMB) – One options player populating the retailer of children’s clothing and accessories waited until the twilight of the final trading day of the week to initiate a bullish stance on the stock. Gymboree’s shares surged as much as 21.425% at the start of the session to touch an intraday high of $50.44 on speculation the firm may put itself up for sale. The rumors drove implied volatility on Gymboree up 20.10% to 48.52% this morning along with the price of the underlying shares and spurred demand for options. Shares as well as volatility cooled somewhat by late afternoon, with shares up 16.5% at $48.40 and volatility higher by 13.5% to 45.85%, as of 3:00 pm ET. The patient bullish player looked to the February 2011 contract to establish a ratio call spread, purchasing 1,050 calls at the Feb. 2011 $48 strike at a premium of $4.80 each, and selling 2,100 calls at the higher Feb. 2011 $55 strike for a premium of $1.85 a-pop. Net premium paid to initiate the spread reduces down to $1.10 per contract. Thus, the trader is poised to profit should GYMB’s shares rally 1.45% over the current price of $48.40 to surpass the effective breakeven price of $49.10 by February expiration day. Maximum potential profits of $5.90 per contract are available to the ratio-spreader if the retailer’s shares surge 13.6% to settle at $55.00 at expiration. The greater proportion of sold calls expose the trader to losses should Gymboree’s shares explode higher to exceed the effective upper breakeven price of $60.90 ahead of expiration day in February. Analysts at Susquehanna raised their share price target on the stock to $60.00 from $48.00 after the Wall Street Journal’s website said bankers were looking into the possibility that Gymboree could be sold to private equity.

Equinix, Inc. (NASDAQ:EQIX) – The provider of global data center services appeared on our ‘hot by options volume’ market scanner in afternoon trading after one options investor initiated a bearish put spread on the stock in the December contract. EQIX shares are currently up 0.60% to stand at $102.95 as of 3:15 pm ET. The put spreader may be building up the pessimistic play as a hedge against the firm’s third-quarter earnings report scheduled for October 21 after the close. The trader purchased 4,168 puts at the December $100 strike for premium of $4.90 each, and sold 4,168 puts at the lower December $90 strike at a premium of $1.85 apiece. The net cost of the transaction amounts to $3.05 per contract, thus positioning the trader to profit should EQIX shares fall 5.80% from the current price to slip beneath the effective breakeven point to the downside at $96.95 by expiration day in the final month of 2010. Maximum potential profits of $6.95 per contract are available to the investor should shares plummet 12.6% to trade below $90.00 by December expiration.

JPMorgan Chase & Co. (NYSE:JPM) – A large-volume bullish transaction on the financial services firm caught our eye this afternoon. It looks as though one big player is positioning for JPM’s shares to climb higher by expiration day next January. Other strategists appear to have enacted short strangles using call and put options expiring in Jan. 2011. Today shares in JPMorgan gained as much as 2.70% to touch an intraday high of $39.09, with shares currently trading 2.35% higher on the day at $38.96 as of 2:05 pm ET. The investor looking for shares to rise initiated a debit call spread, buying 20,000 calls at the January 2011 $39 strike at a premium of $2.55 each, and selling the same number of calls at the higher January 2011 $42 strike for a premium of $1.30 apiece. The net cost of the transaction amounts to $1.25 per contract and prepares the investor to make money if shares rally above the effective breakeven price of $40.25 by expiration day. Maximum potential profits of $1.75 per contract are available to the trader should JPM’s shares increase 7.80% over the current price of $38.96 to trade above $42.00 by January expiration. In contrast to the call spreader, strangle strategists took a different approach. These traders are expecting JPMorgan’s shares to remain range-bound through expiration in January. Investors appear to have sold approximately 5,000 calls at the January 5,000 calls at the Jan. 2011 $43 strike for premium of $1.00 each, and shed some 5,000 puts at the Jan. 2011 $36 strike at an average premium of $1.85 a-pop. Gross premium enjoyed on the transaction amounts to $2.85 per contract. These traders keep the full amount of premium received as long as JPM’s shares trade within the confines of the strike prices described through expiration day in the first month of 2011. Short-strangle holders could suffer losses if JPM’s shares rally above the upper breakeven price of $45.85, or if shares trade below the lower breakeven point at $33.15, at expiration.

iShares Silver Trust ETF (NYSEARCA:SLV) – One cautious options player purchased a put spread on the silver ETF today to position for the possibility that the price of the underlying fund may continue lower ahead of January 2011 expiration. Shares of the SLV, which typically reflect the value of the price of silver owned by the Trust, are currently up 1.15% at $21.55 as of 1:55 pm ET. The put spreader may be utilizing the trade to protect the value of a long position in SLV shares, or could be initiating an outright bearish bet on the fund. The investor purchased 4,000 puts at the January 2011 $20 strike for a premium of $0.71 each, and sold 4,000 puts at the lower January 2011 $16 strike at a premium of $0.10 a-pop. Net premium paid to establish the put spread amounts to $0.61 per contract. Profits, or downside protection, start to accumulate should SLV shares plunge 10.0% lower to breach the effective breakeven price of $19.39 by January expiration. Maximum available profits of $3.39 per contract pad the investor’s wallet if the ETF’s shares plummet 25.75% from the current price of $21.55 to trade below $16.00 by expiration day next year.

SunTrust Banks, Inc. (NYSE:STI) – A bullish risk reversal enacted on the commercial banking and financial services firm suggests one optimistic investor is expecting the price of the underlying shares to rise ahead of November expiration. The risk reversal transaction may be a positive signal ahead of the company’s third-quarter earnings report slated for release ahead of the opening bell on October 21, 2010. SunTrust’s shares are currently up 0.45% at $25.95 as of 12:40 pm ET. The investor appears to have sold 10,000 puts at the November $22 strike for a premium of $0.37 each in order to purchase the same number of calls at the higher November $29 strike for premium of $0.50 apiece. Net premium paid to initiate the risk reversal amounts to $0.13 per contract. Thus, the trader is positioned to profit should STI’s shares surge 12.25% over the current price of $25.95 to surpass the effective breakeven price of $29.13 by expiration day. SunTrust’s shares last traded above $29.13 back on May 18, 2010.

MBIA, Inc. (NYSE:MBI) – Bullish strategists bombarded MBI in the first half of the trading session with shares of the insurance company trading higher by 2.30% as of 12:05 pm ET to stand at $10.28. At least one options investor has initiated a synthetic put on the stock in order to position for MBI’s shares to explode to the upside by January 2011 expiration. It looks like the medium-term optimistic player sold a massive chunk of MBIA shares, roughly 573,000 of them, at approximately $10.03 apiece spread against the purchase of roughly 18,850 calls at the January 2011 $12.5 strike at a premium of $0.53 per contract. The synthetic put strategy positions the investor to make money if MBI’s shares shoot straight through $12.50 and the delta on the calls continues to climb by expiration day. This leveraged exposure to upside potential is provided by the long calls because those contracts will appreciate at a faster rate than the accrual of losses from the short stance in shares if the insurer’s share price rises significantly in the next four months. Additionally, the long calls help protect him from losses on the short position in shares while the price of the underlying appreciates toward the strike price of $12.50. If shares fail to rally and actually decline the trader may profit as the short shares become more profitable on the trek lower. Options implied volatility on MBIA, Inc. is up 4.5% at 59.07% as of 12:15 pm ET.

iShares MSCI Emerging Markets Index ETF (NYSEARCA:EEM) – Fresh interest in call options on the emerging markets fund is building in the first half of the session with the price of the underlying shares trading higher by 1.10% to arrive at $45.26 just before 11:40 am ET. Earlier in the session, shares of the ETF rallied 1.40% to hit a new 52-week high of $45.40. Perhaps shares of the EEM, an exchange-traded fund that tracks the performance of the MSCI Emerging Markets Index – an Index designed to measure equity market performance in the global emerging markets, are up following news that China’s manufacturing expanded at the fastest pace in four months in September. Some positive signs that economic growth may be on the mend and China’s better-than-expected PMI number released today may have inspired fresh demand for calls on the emerging markets fund. It looks like bullish options traders purchased some 23,500 calls at the October $47 strike for an average premium of $0.15 each versus previously existing open interest at that strike of just 5,037 contracts. Call buyers are poised to profit should shares of the EEM rally 4.175% to trade above the average breakeven price of $47.15 by November expiration. Emerging markets bulls appear to be positioning for shares of the fund to continue rising to new heights through expiration day in just a few weeks time.

China Petroleum & Chemical Corp. (NYSE:SNP) – Shares of the largest Chinese oil and petrochemical company are up 1.20% at $89.34 in morning trading perhaps on news the company, known by the abbreviation Sinopec, purchased a 40% stake in the Brazilian unit of Spanish oil company Repsol for $7.1 billion. It looks like one investor expecting Sinopec’s shares to climb higher by January 2011 expiration is positioning for the rally by initiating a bullish risk reversal. The trader sold 2,250 puts at the January 2011 $80 strike at an average premium of $1.7750 apiece in order to buy the same number of calls at the higher January 2011 $100 strike for a premium of $1.45 each. The investor pockets a net credit of $0.325 per contract and keeps the full amount as long as SNP’s shares exceed $80.00 through expiration day next year. Additional profits start to amass should the price of the underlying shares surge 11.9% over the current price of $89.34 to trade above $100.00 ahead of expiration day in January.

Market Vectors Gold Miners Index ETF (NYSEARCA:GDX) – A short strangle initiated on the gold miners fund this morning indicates one options strategist expects the price of the underlying shares to trade within a specified range through expiration in November. Shares of the GDX, an exchange-traded fund designed to replicate the performance of the NYSE Arca Gold Miners Index, are up 1.35% at $56.68 as of 11:20 am ET. The strangle player sold 4,000 puts at the November $52 strike for premium of $0.88 apiece and shed 4,000 call at the higher November $62 strike at a premium of $0.67 each. Gross premium pocketed on the transaction amounts to $1.55 per contract. The investor keeps the full amount of premium received on the strangle if GDX shares trade above $52.00 but below $62.00 through November expiration day. Short positions in both call and put options expose the investor to losses should shares of the fund rally above the upper breakeven price of $63.55, or if shares trade below the lower breakeven point at $50.45, ahead of expiration.

Source: Friday Options Update: MBI, EEM, SNP, GDX