Friday Options Briefs: CVC, STMP, LVS

Includes: CVC, LVS, STMP
by: Interactive Brokers

Cablevision Systems Corp. (NYSE:CVC) – Investors punished shares in Cablevision Systems Corp. on Friday after the cable operator said it lost 19,000 video subscribers in the quarter on top of third-quarter net income of $0.14 a share that missed estimates of $0.32 a share by a hefty margin. Shares in CVC plunged 15.25% to an intraday low of $14.50 following the disappointing report. Near-term bearish trading in options covering Cablevision suggests some traders expect the stock to pull back to fresh 52-week lows by expiration in November. Investors exchanged more than 1,400 in-the-money puts at the Nov. $15 strike against open interest of 490 contracts. It appears majority of the puts were purchased for an average premium of $0.65 a-pop. Put buyers may profit at expiration next month in the event that CVC’s shares slip beneath the average breakeven price of $14.35. Another sign of near-term pessimism on the cable operator was the sale of some 217 calls at the Nov. $15 strike this morning for an average premium of $0.78 each. Call sellers walk away with the premium received on the transaction as long as shares in CVC fail to rally above $15.00 through expiration day. Options volume on the stock is relatively high, with more than 6,000 contracts in play as of 12:45 pm on the East Coast. Put options on the stock are more than twice as active as calls this afternoon., Inc. (NASDAQ:STMP) – Shares in the provider of online postage solutions and services soared 25.0% to a more than five-year high of $32.47 today on the heels of better-than-expected third-quarter earnings reported after the close on Thursday. Options trading patterns on this morning suggest there are some strategists prepping for shares to continue to climb in the near term. Meanwhile, pre-earnings report call buyers are today holding contracts that exploded in value overnight. Some traders initiated their positions on at the beginning of the month, before the market commenced its sharp move to the upside. The Nov. $20 strike call was one area populated by bullish players. Open interest in the call stands at 1,145, and it looks like more of those positions were initiated by buyers than sellers for an average premium of $2.50 each. These calls are now nearly five times as expensive, with the last-traded price on the option displaying $12.10 as of 12:25 pm EDT. Investors enjoying a much quicker turn-around on their position snapped up around 220 calls at the Nov. $25 strike for an average premium of $1.69 apiece earlier this week. Traders buying the Nov. $25 strike call today paid an average premium of $4.93 a-pop, or roughly three times as much post-earnings. Bullish players expecting STMP shares to continue to climb purchased around 270 in-the-money calls at the Nov. $30 strike for an average premium of $1.27 per contract, and picked up another 251 calls up at the Nov. $35 strike at an average premium of $0.57 apiece. Buyers of the calls profit at expiration next month if shares in top the average breakeven prices of $31.27 and $35.57, respectively. Implied volatility on the stock dropped 23.9% to 56.8% by 12:30 pm in New York.

Las Vegas Sands Corp. (NYSE:LVS) – Options strategists populating weekly call options on Las Vegas Sands this morning are positioning for the stock’s run higher to continue over the next five trading sessions. Shares in the casino resort operator gained 6.85% to stand at $48.51 by 11:30 am EDT, after earlier soaring as much as 8.9% to an intraday high of $49.44. Las Vegas Sands Corp. shares recovered in leaps and bounds over the past several weeks, rallying an impressive 34.0% off an October 4 low of $36.20. Buyers of call options set to expire next Friday are prepared to profit in the event next week’s performance in the stock is anything like what we have seen in the present one. The Nov. ‘04 $50 strike call is the most heavily trafficked, with more than 3,300 contracts having changed hands against open interest of 545 positions. It looks like the majority of the calls were purchased for an average premium of $0.72 per contract. Bulls holding the contracts may profit at expiration if the casino operator’s shares increase another 4.5% to surpass the average breakeven point on the upside at $50.72. Meanwhile, fresh prints in the higher Nov. ’04 $52.5 strike call suggest like-minded traders snapped up roughly 300 of these options for an average premium of $0.22 each. Options implied volatility on LVS plunged 18.8% to 43.6% in the first half of the session.