H&R Block, Inc. (HRB) – Investors are bulking up on H&R Block put options this afternoon following reports the provider of tax services acquired tax-preparation firm 2SS Holdings for $287 million in cash. HRB’s shares dropped like a rock today, falling as much as 10.445% during the session to hit an intraday low of $12.26. Options traders basically ignored the existence of H&R Block calls and instead focused their efforts on buying up bearish put contracts across several expiries. More than 7.95 put options changed hands on HRB for each single call option in play on the stock as of 3:15 p.m. in New York trading. The sharp increase in demand for put options and the rapid descent in the price of the underlying shares fueled a 33.3% rise in the overall reading of options implied volatility on the stock to 70.39% late in the trading day. Pessimistic players picked up 5,600 now in-the-money puts at the October $12.5 strike for an average premium of $0.24 each. These contracts expire tomorrow, but investors may make money if HRB’s shares trade below the average breakeven price of $12.26 ahead of expiration. Put volume is most significant in the November contract. It looks like investors picked up 9,300 puts at the November $10 strike at a premium of $0.38 each, coveted another 10,300 contracts at the November $11 strike for premium of $0.57 apiece, and purchased approximately 2,500 puts at the November $12 strike for a premium of $0.81 a-pop. Volume in put options generated at each of the strikes described outweighs previously existing open interest at each one many times over. Put players may be scrambling to secure downside protection on existing positions in the underlying shares, or could be enacting outright bearish bets on the stock. HRB’s shares are down 9.50% at $12.39 with 35 minutes remaining in the trading session.
SPDR S&P Retail ETF (XRT) – It looks like one well-positioned retail sector bull booked profits by unraveling a previously established debit call spread in the December contract this afternoon. Shares of the XRT, an exchange-traded fund designed to replicate the performance of the S&P Retail Select Industry Index, fell 0.85% late in the session to stand at $43.34. The trader appears to have initially accumulated a 30,000-lot debit call spread at an average net cost of $1.00 per contract between September 3 and 9 when shares of the fund were trading within a range of $38.46 to $39.12. Shares of the ETF have rallied substantially since the spread was initiated. But, perhaps the unraveling of the bullish play is a sign the investor is taking available profits of the table because he believes the rally has run out of steam. The investor sold the 30,000-lot spread at the December $41/$45 strikes today to receive a net premium of $2.285 per contract. Thus, the investor pockets average net profits of $1.285 per contract by taking the trade off at this time. Options implied volatility on the retail fund is currently up 7.4% at 26.08% with 20 minutes remaining in the trading day.
Garmin, Ltd. (GRMN) – Bullish traders picked up call options on the manufacturer of consumer electronics right out of the gate this morning. Shares of the maker portable and fixed-mount GPS-enabled navigation products surged 4.6% in the first half of the trading session to secure an intraday high of $32.85, and likely attracted investors to purchase near-term call options on the stock. However, Garmin’s earlier run up in shares disappeared by 1:30 p.m. in New York, and the stock is currently down 0.30% to arrive at $31.34. Options traders exchanged more than 5,200 calls at the October $32 strike, and traded upwards of 1,940 calls at the higher October $33 strike. It looks like the majority of those calls were purchased, with approximately 2,900 lots picked up at the October $32 strike for an average premium of $0.32 apiece. Call buyers holding the October $32 strike contracts make money if Garmin’s shares rally above the average breakeven price of $32.32 by expiration tomorrow. Bulls scooped up roughly 1,100 of the calls traded at the October $33 strike for an average premium of $0.19 apiece. These calls expire worthless tomorrow unless shares exceed $33.00. Investors long the higher-strike calls are prepared to profit should GRMN’s shares surge 5.90% over the current price of $31.34 to surpass the average breakeven point at $33.19 by October expiration. Garmin’s overall reading of options implied volatility is up sharply by 21.2% to arrive at 49.17% as of 1:55 p.m.
Halliburton Co. (HAL) – Shares of the oil equipment and services provider are down 1.65% in early afternoon trading to stand at $35.04 as of 12:35 p.m., but one bullish options trader populating the stock today prepared for shares to reverse course and hit new 52-week highs by November expiration. Halliburton’s shares rallied to a new 52-week high of $35.85 yesterday. According to news reports, the Houston, TX-based firm was awarded a contract by ExxonMobil to refurbish wells in the West Qurna field in southern Iraq. But, back to the options field, the optimistic individual signaled expectations of a strong rebound in Halliburton’s shares by purchasing a large block of approximately 20,000 call options outright at the November $38 strike for an average premium of $0.725 per contract. The bullish player stands ready to make money should HAL’s shares surge 10.5% over the current price of $35.04 to surpass the average breakeven point on the calls at $38.725 by expiration day next month. The large block of 20,000 call options exchanged at the November $38 strike is 3.875 times the volume represented by previously existing open interest of 5,161 contracts at that strike. HAL’s overall reading of options implied volatility jumped 12.7% to 40.94% this afternoon. The oil services firm reports third-quarter earnings ahead of the opening bell on October 18, 2010.
Ford Motor Co. (F) – One big bullish options player appears to be positioning for Ford’s shares to touch a new 52-week high by November expiration. The automaker’s shares are up 2.25% at $13.95 as of 12:55 p.m. this afternoon, but earlier increased as much as 2.70% to touch an intraday high of $14.01. It looks like the investor upped bullish expectations on the car manufacturer by rolling a sizable long call position to a higher strike price in the November contract. The trader appears to have originally purchased approximately 33,000 calls at November $14 strike for an average premium of $0.56 each back on October 11, 2010. Today he sold the calls at a slightly greater premium of $0.58 apiece in order to purchase 32,500 calls at the higher November $15 strike at a premium of $0.22 per contract. The investor starts to make money on the new batch of calls purchased today if Ford’s shares surge 9.10% over the current price of $13.95 to exceed the effective breakeven point at $15.22 by November expiration. Ford Motor Co. earlier reported that sales in the main 19 European markets declined 16% last month, which represents the firm’s weakest September auto sales reading since 1998. Options implied volatility on the automaker is up 3.1% at 35.17% as of 1:05 p.m. in New York.
Monster Worldwide, Inc. (MWW) – The provider of global online employment technology that connects employers with job seekers popped up on our ‘hot by options volume’ market scanner this morning due to bullish activity in November contract call options. Shares in Monster Worldwide rallied as much as 0.42% earlier in the session to touch an intraday high of $13.75, but have since reversed course and are flat on the day to stand at $13.20 as of 11:40 a.m. in New York. Investors hoping to see Monster’s shares rise ahead of expiration day next month purchased approximately 2,100 calls at the November $14 strike for an average premium of $0.61 each. Call buyers make money if the price of the underlying stock jumps 10.7% over the current price of $13.20 to surpass the average breakeven point at $14.61 by November expiration. Optimism spread to the higher November $15 strike where some 2,000 calls were picked up at an average premium of $0.33 each. Investors holding these contracts profit if MWW’s shares surge 16.1% and trade above the average breakeven price of $15.33 by expiration day. Monster Worldwide is scheduled to report third-quarter earnings ahead of the opening bell on October 28, 2010. Investors initiating bullish stances on the stock are well-positioned to benefit from share price appreciation should the firm’s earnings report beat expectations. The demand for calls on the stock helped lift MWW’s overall reading of options implied volatility 9.6% to 50.06% as of 11:50 a.m.
Bank of New York Mellon Corp. (BK) – Bearish players positioning for shares in Bank of New York Mellon to slide lower ahead of expiration next month picked up November contract put options this morning. BK’s shares fell 1.45% to $26.25 by 11:50 a.m. The firm reveals how it performed in the third-quarter before the market opens on October 19, 2010. Investors scooped up roughly 3,875 puts at the November $25 strike for an average premium of $0.53 a-pop. Put buyers are prepared to make money should shares decline 6.8% to breach the average breakeven point on the downside at $24.47 by November expiration. Approximately 4,800 puts changed hands today at the November $25 strike versus previously existing open interest of just 708 contracts at that strike. Options implied volatility on the stock is up 5.5% to 30.18% just before 12:00 p.m. in New York trading.