... the top options trade in the chipmaker today is a 10,000-contract block of Jan 16 puts, sold at 53 cents and tied to 180K shares at $19.86. It's possibly closing and or a bet that shares will hold above $16 (~19.4%) through the January expiration. INTC is up 3.5% this week and has not traded for less than $16 since July 2009.
It appears at least one other trader agrees with Weinstein's sentiment. My guess is that more exist.
Pandora (P): Both optionMONSTER and Andrew Wilkinson pointed out bullish options activity in P in Friday articles. Both columns pointed to a big block sale in P September $12 puts. The trader in the spotlight believes P will hold above $12 per share by September's option expiration day or he/she is happy to scoop up shares at that level if assigned.
Given Pandora's strong earnings report and ability to create further disruption in the traditional radio model (i.e. take ad revenue away from terrestrial), I like the trade. I intend to write a separate Seeking Alpha article that discusses Pandora's current position and future.
In terms of playing the stock, despite my lingering concerns over music royalty costs, I am a buyer. I like the idea of selling puts in addition to going long the underlying, but I think executing a buy-write makes sense by writing covered calls on somewhat pricey October out-of-the-money calls.
As mentioned, I remain a big proponent of selling puts in this environment, particularly on high fliers. Consider how things look today had you written puts on the following stocks I highlighted on Monday. I suggested selling September puts in each case.
- Sell Tiffany (TIF) Sept $57.50 put for $3.50.
- Sell Johnson Controls (JCI) Sept $28 put for $1.35.
- Requires $8,550 to secure the puts. $1,450 cash balance plus $485 premium income.
- Sell Apple (AAPL) Sept $360 put for $15.75.
- Sell Lululemon (LULU) Sept $43.75 put for $3.40.
- Requires $48,925 to secure the puts. $1,075 cash balance plus $2,400 premium income.
- Sell Amazon.com (AMZN) Sept $175 put for $8.45.
- Sell Chipotle (CMG) Sept $280 put for $13.30.
- Requires $94,425 to secure the puts. $5,575 cash balance plus 4,575 premium income.
|Company (Ticker)||Friday Close||Short Put (Entry)||(Exit) Gross Profit||Effective Price if Assigned|
|Tiffany (TIF)||$69.01||$57.50 ($3.50)||($0.58) $292||$54.00|
|Johnson Controls (JCI)||$30.25||$28.00 ($1.35)||($0.70) $65||$26.65|
|Apple (AAPL)||$383.68||$360 ($15.75)||($4.02) $1,173||$344.25|
|Lululemon (LULU) ||$52.31||$43.75 ($3.40)||($1.25) $215||$40.35|
|Amazon.com (AMZN)||$199.27||$175 ($8.45)||($2.30) $615||$166.55|
|Chipotle (CMG)||$298.88||$280 ($13.30)||($5.25) $805||$266.70|
Assuming you opened the trades Monday and closed them Friday (I used the midpoint at Friday's close), you could have banked somewhere in the neighborhood of $3,165 in profits in just five days. You could not come close to doing that in most lines of work, not even panhandling as the rich and famous drive by on Beverly Drive in posh Beverly Hills.
Additional disclosure: I may open or close positions, most likely via options, in any of the stocks mentioned in this article at any time.