EI Du Pont de Nemours & Co. (DD) – Shares in the U.S. chemical maker dropped on Friday after the company lowered full-year earnings guidance by $0.10 a share to a range of $3.87 to $3.95 a share. The stock is off its lowest point of the session to stand 4.75% lower on the day at $44.31 just before 12:00 PM ET. Activity in Du Pont put options expiring in January 2012 indicate some traders are positioning for the price of the underlying to extend losses in the near term. It appears one strategist initiated a ratio put spread, buying 2,250 puts at the Jan. 2012 $41 strike for a premium of $0.94 each, and selling 4,500 puts at the lower Jan. 2012 $38 strike at a premium of $0.48 apiece. The spread yields a net credit of $0.02 per contract and positions the trader add to profits in the event that shares drop 7.5% from the current price of $44.31 to breach the effective breakeven point on the downside at $41.00 by expiration. Maximum potential profits of $3.02 per contract are available to the investor should Du Pont’s shares plunge 14.2% to settle at $38.00 at expiration day in January. The chemical company is scheduled to report fourth-quarter earnings ahead of the opening bell on January 25, after the Jan. 2012 expiry puts will have expired.
BCSI (BCSI) – November saw the value of their positions sky-rocket overnight on news Blue Coat Systems, Inc. agreed to be purchased by an investor group for a reported $1.3 billion. Shares in the provider of Internet-security software jumped 44.5% to $25.27 in the first half of the trading session. Call open interest in the front month appears to have been largely built up by investors initiating bullish stances on the stock. The heaviest interest is in the Dec. $19 and $20 strike call options, where positions were established at the end of November. It looks like traders bought around 1,000 calls at the Dec. $19 strike for an average premium of $0.48 each back on November 30, when shares in BCSI were trading around $18.00. Today the Dec. $19 strike call options cost 14 times as much at $6.30 each. Finally, open interest in the front month is heaviest up at the Dec. $20 strike. These positions were mostly established on November 30, and it looks like the majority of the 5,052 calls at that strike were purchased for an average premium of $0.25 a-pop. The value of these contracts increased 21-fold over the average premium paid by investors in November, with the calls commanding an ask-price of $5.30 as of 11:50 AM in New York trade.
JetBlue Airways, Inc. (JBLU) – Bullish positioning in JetBlue observed earlier in the week continued Friday on signs the air carrier will have a busy holiday season. Shares in the airline are currently up 5.9% to stand at $5.03 in early-afternoon trade. Near-term bulls expecting the price of the underlying to extend gains through expiration next week purchased roughly 9,000 in-the-money calls at the Dec. $5.0 strike for an average premium of $0.19 a-pop. Investors long the calls many profit at expiration as long as shares in JBLU exceed the average breakeven price of $5.19. Call buying spread to the Jan. 2012 contract where traders snapped up 1,000 calls at the $5.0 strike for an average premium of $0.42 each, and purchased some 6,600 call options up at the Jan. 2012 $6.0 strike at a premium of $0.17 a-pop.
Fairchild Semiconductor International (FCS) – Shares in the chip maker are off their session-lows, but remain in the red, down 0.65% at $12.59 this afternoon. Call activity in the front month this morning indicates one trader expects the stock to rebound ahead of expiration next week. It looks like the trader purchased roughly 2,300 calls at the Dec. $13 strike for an average premium of $0.30 each. Profits are available to the investor if Fairchild’s shares rally 5.6% during the next five trading sessions to exceed the effective breakeven price of $13.30 at December expiration.