Tuesday Options Brief: MCD, INTC & JPM

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Includes: INTC, JPM, MCD
by: Interactive Brokers

MCD - McDonald's Corp. - Traders hungry for bullish options on McDonald's Corp. purchased upside calls on the stock this morning, with shares in the world's largest restaurant chain rising as much as 0.90% to $92.10 at the start of the session on better-than-expected August same-store sales growth in its Asia Pacific, Africa and Middle East region. Options players positioning for shares in MCD to extend gains during the next five weeks snapped up Oct. $92.5 and $95 calls. The Oct. $95 strike call is the most heavily traded at present, with around 3,700 contracts in play as of 12:15 p.m. in New York. It looks like most of the $95 calls were purchased for an average premium of $0.51 apiece, thus preparing buyers to profit at expiration next month should the price of the underlying rally another 3.7% to exceed the average breakeven price of $95.51. Bullish activity spread to longer-dated contracts expiring in December, where around 2,600 of the Dec. $95 strike calls were purchased for an average premium of $1.21 each. These contracts may be profitable at expiration if the Big Mac maker's shares rally 4.5% to top $96.21, the highest since May. McDonald's is scheduled to report third-quarter earnings ahead of the opening bell on October 19th, the last session available to trade the October options before they expire.

INTC - Intel Corp. - Shares in the chip maker are on the mend today, up 1.3% at $23.57 as of 12:25 p.m. ET, reversing some of the declines suffered during the prior two trading sessions. A large bullish risk reversal initiated on INTC this morning suggests one big options market participant is positioning for further gains in the price of the underlying this year. It looks like the strategist sold around 25,000 puts at the Dec. $21 strike at a premium of $0.45 each in order to partially offset the cost of buying roughly the same number of Dec. $25 strike calls at a premium of $0.47 apiece. The trader paid a net premium of $0.02 per contract and stands ready to profit at expiration in December in the event Intel's shares rally 6% to exceed the effective breakeven price of $25.02.

JPM - JPMorgan Chase & Co. - Upside calls with three full trading sessions remaining to expiration are active today as shares in the largest U.S. bank continue to march higher. Shares in JPMorgan are up 1.2% at $39.22 as of 12:55 p.m. ET, marking a near 30% gain in the stock price since the post-whale trade low of $30.83. Options players positioning for further upside in the shares in the near term scooped up weekly calls on the financial services firm. Traders exchanged more than 8,900 calls at the Sep. 14 '12 $40 strike in the first half of the session, buying most of the volume for an average premium of $0.16 apiece. Call buyers may profit at expiration as long as shares in JPM rally another 2.4% to top the average breakeven point at $40.16. The stock last traded above $40.16 back in May.