Monday Options Brief: UBS, RIMM, HZNP

Includes: BB, HZNP, UBS
by: Interactive Brokers

UBS - UBS AG - Call options looking for a rebound in shares of Switzerland's largest lender in the next six weeks are in play today ahead of the company's second-quarter earnings report on July 31st. Shares in the Swiss bank are near the lowest levels of the year, down almost 40% since July 2011, and currently lower by 0.80% on the day to stand at $10.93 just before 1:00 p.m. ET. Traders appear to have purchased around 1,190 calls at the Aug. $12 strike for a premium of $0.15 per contract. Call buyers may profit at August expiration should shares in UBS rally 11.2% to surpass the effective breakeven price of $12.15. The stock last traded above $12.15 back in May.

RIMM - Research in Motion, Ltd. - Shares in the troubled mobile phone maker reversed gains realized in early trading on Monday to stand 3.5% lower on the session at $7.82 as of 12:15 p.m. in New York. Fresh positioning in October expiry call options within minutes of the opening bell this morning suggests one or more strategists may be positioning for shares in Research in Motion to improve during the next few months. Upwards of 8,000 calls changed hands at the Oct. $9.0 strike, with much of the volume trading in a block of 4,136 lots versus open interest of 1,617 contracts. It looks like almost all of the calls were purchased for an average premium of $0.79 apiece, establishing an average breakeven price of $9.79 on the upside. Traders long the Oct. $9.0 calls profit at expiration if shares in RIMM surge 25.2% to exceed $9.79. Executives of the Blackberry maker face shareholders tomorrow at the company's annual shareholder meeting in Waterloo, Ontario.

HZNP - Horizon Pharma, Inc. - Biopharmaceutical company, Horizon Pharma, Inc., popped up on our 'hot by options volume' market scanner this morning due to unusually heavy trading traffic in the August and November expiry calls. More than 6,000 call options have changed hands on HZNP so far today versus the stock's overall open interest level of 5,127 contracts. Upside call buying is heaviest in the Nov. $7.5 strike call where some 5,800 contracts were picked up for an average premium of $0.90 apiece. Similar in-the-money call buying was seen at the Aug. $7.5 strike, with around 1,000 calls purchased at an average premium of $0.70 each. Shares in the name are down 4.5% this afternoon at $7.62. Perhaps call buyers are positioning for shares to rise following the company's presentation at the JMP Securities Healthcare Conference on Thursday afternoon in New York. Second-quarter earnings from Horizon Pharma are expected out ahead of the opening bell on August 30th.