Wednesday's Options Report: Intel, AMD, Comcast, FCL, TOPT, PSS

(INTC)– Intel – This morning’s Thomas Weisel Partners report forecasting heightened demand for PC’s in 2008 provided a boon for makers of PC components, sending call volumes and implied volatility in semiconductor makers sharply higher, and nowhere was the move more symbolic than in the world’s leading chipmaker, Intel. This morning’s 3.6% gain for shares to $27.28 coincides with an option volume of nearly 110,000 lots – a figure that includes more than 5 times as many calls trading as puts. Heavy liquidity is observed in 27.50 calls in the December and January contract, but a big hint as to the level of confidence option traders are ascribing to the “chipmaker that could do no wrong” is seen in the dramatic level of buying interest in January 30 calls. These calls, which have traded more than 13,000 times on premiums up more than 105% in value today, suppose an upside move for Intel shares into the New Year that hasn’t been seen since early 2004.

(AMD) – The action carried over into Advanced Micro Devices (AMD), where option traders appear to be positioning for continued share price turbulence through the first of the year. AMD popped up on our market scanners initially due to a near-10% rise in implied volatility to 66.3%. This represents a significant elevation above the 48.1% historic reading, and suggests traders are looking for 37% more share price volatility in the world’s second-biggest maker or microprocessors than they have shown historically – and that furthermore, despite this morning’s .76% gain for AMD shares, the potential for share price movement hasn’t been fully revealed in the current $9.32 share price.

(CMCSA) – Comcast Corp. Cl A – Shares in Comcast, the country’s largest cable TV provider, lost 10% of their value this morning to trade at $18.61. The company cut its year-end guidance for sales and new customers due to the downturn in the housing market, which has thinned the field of potential new subscribers. While the 18.4% hike in implied volatility is a clue that the market expects these factors haven’t yet fully coursed through the share price, option positioning suggests traders casting a forgiving glance at Comcast and confident that the near-term damage will be minimal. Option traders are confident enough of this to establish fresh long positions in the December $17.50 calls at a price of $1.40 – a position that just to break even would require Comcast shares to remain at $18.90 upon expiry – 30 cents above the current share price level. Another 11,450 lots traded in the January 20 calls, these to the middle of the market and within the bounds of existing open interest.

(FCL) –Foundation Coal Holdings – A minor half-percent gain for shares price to $46.00 is coinciding with option volume exceeding 8 times the daily average in Foundation Coal, which runs 13 mines in Pennsylvania, West Virginia and Wyoming, producing some 72 million tons of coal annually. In absolute terms, the 8,267 options in play measure up against 18% of the total open interest. One of the company’s executives is slated to present at a commodities symposium today, but option traders are saving their directional plays - favoring sustained upside - for the month of June. Similar 4,000-lot volumes at the 35 and 50 strikes suggest strangle activity in that contract, and time and sales indicates that the 35 puts were sold. A trader in this case would wager on shares remaining within the $35-50 range into June – the current $46.00 share price is within a dollar of the 52-week high.

(TOPT) –Top Tanker Inc – Also an implied volatility gainer with a 14.6% surge in implied vol overnight, the expectation for rocky share price action in commodities transporter Top Tanker is further borne out by the increase in option volume to 6 times the average level. The current $3.25 share price reflects a 14.7% decline on the session, and volume in the December 5.0 puts suggests traders looking to lock in a premium sale price to the $3 quote in the company’s plan to sell 21 million shares to buy new tankers and pay down its debt. (

(PSS) - Yesterday’s option action suggested an upside earnings surprise from Collective Brands Inc., the Topeka-based parent of Payless Shoe Source and Stride Ride shoes whose share price had taken an unrelenting 52% wallop over the past year. Reporting after the bell yesterday, Coillective Brands announced third-quarter EPS of 39 cents, a year-on-year decline but beating street estimates of 32 cents a share prior to the report. Shares in Collective Brands gained 23% in value today to trade at $18.57 ahead of the noon hour, and its options continue to hold traction on our market scanners, with contracts trading at 9 times the average volume. Five times as many calls are trading as puts today, due in no small part to a wave of profit taking in December 15 calls. These contracts were bought heavily yesterday at a price of $1.35 and were flipped today at a price of $3.64 – a 192% profit in the space of 24 hours. Now doesn’t it feel good to pay less…?