Thursday Options Brief: TPX, AAPL & PPG

 |  Includes: AAPL, PPG, TPX
by: Interactive Brokers

TPX - Tempur-Pedic International, Inc. - Investors in mattress maker, Tempur-Pedic International, may be able to sleep a bit easier ahead of the second-quarter earnings report next week after Select Comfort Corp., the maker of Sleep Number adjustable beds, posted better-than-expected second-quarter earnings and raised their full year profit forecast on Wednesday. Shares in TPX are up 5% at $26.81 today in sympathy with Select Comfort, which rallied nearly 30% to an intraday high of $28.13 a share this morning. Options activity on Tempur-Pedic suggests traders are positioning for the price of the stock to extend gains in the near term. Fresh interest in the August expiry calls started to build just before 10:30 a.m. ET this morning, with the Aug. $28 strike call trading 675 times versus open interest of 89 contracts. It looks like most of the calls were purchased for an average premium of $1.51 apiece, positioning for an upside move of at least 10% by expiration. Upside call buying spread to the Aug. $29 strike where around 440 calls were purchased at an average premium of $1.30 each. Far out-of-the-money $31 and $32 strike calls changed hands more than 500 times apiece in the first half of the session. Shares in TPX are down 50% year-to-date.

AAPL - Apple, Inc. - The iPhone maker's shares are sitting near their highs of the day, currently up 1.2% at $613.51 as of 12:30 p.m. ET. The newly available weekly options are humming with activity ahead of the company's third-quarter earnings report next Tuesday, helping drive the day's volume to 350,000 contracts, roughly 57% of the stock's average daily options volume, in the first half of the trading session. Call options are more active than puts this afternoon, with the call-to-put ratio hovering around 1.65. Options with one full trading day left to expiration are the most heavily trafficked, specifically the July 20 '12 $110 call where upwards of 36,000 calls have changed hands versus open interest of 21,513 contracts.

PPG - PPG Industries, Inc. - Shares in PPG Industries are soaring today, up 5.4% on the day at $109.81 as of 12:20 p.m. in New York, on reports Georgia Chemical Corp. will buy PPG's commodity chemicals company for $900 million in cash and $1 billion in stock. One or more traders positioning for the price of the underlying to push higher by the end of the week snapped up 1,200 calls at the July $110 strike for an average premium of $0.65 apiece. Call buyers stand ready to profit at expiration in the event PPG shares climb another 0.80% to surpass the average breakeven point at $110.65. Shares in PPG had rallied as much as 7.1% earlier in the session to touch an intraday and all-time high of $111.63.