United Parcel Service, Inc. (NYSE:UPS) – Shares in UPS are off their lows of the session this afternoon, down just 0.05% to stand at $76.28 as of 12:20 p.m. ET. The stock joined in the strong broad-based rally in equities this week after U.S. lawmakers finally came to a last-minute agreement to avoid drastic spending cuts and tax increases. Options traders positioning for shares in United Parcel Service, Inc. (NYSE:UPS) to increase significantly during the first half of this year appear to be picking up July expiry calls. It looks like traders exchanged upwards of 10,900 calls at the July $77.5 strike this morning versus open interest of 3,731, and purchased most of the contracts for an average premium of $2.73 apiece. Call buyers stand ready to profit at July expiration should shares in United Parcel Service, Inc. (NYSE:UPS) increase more than 5% to top the average breakeven price of $80.23. Shares in the name last traded above $80.23 in July 2012. United Parcel Service, Inc. (NYSE:UPS) reports fourth-quarter earnings four weeks from today.
Mattel, Inc. (NASDAQ:MAT) – Toy maker, Mattel, Inc. (NASDAQ:MAT), popped up on our market scanners today following heavy volume in the February expiry put options. Shares in the name are currently down 0.30% on the day to stand at $36.70, but closed out 2012 up better than 30% for the year. Some of the trading traffic in Mattel, Inc. (NASDAQ:MAT) puts today may be the work of strategists locking in gains and bracing for possible declines in the price of the underlying after the company reports fourth-quarter earnings at the end of January. Traders exchanged approximately 2,100 in-the-money puts at the Feb. $38 strike, buying most of the contracts at an average premium of $2.00 apiece. These contracts start making money if shares in Mattel dip below the average breakeven price of $36.00 by expiration next month. The Feb. $36 strike calls are in play today as well, with around 1,800 lots purchased for an average premium of $0.97 each. Traders long the $36 strike put options may profit at February expiration should Mattel’s shares slide 4.6% from the current level to breach the average breakeven price of $35.03. Finally, put volume on Mattel today is greatest at the Feb. $37 strike where two blocks of 2,500 put options each changed hands against open interest of 85 contracts.
Scientific Games Corp (NASDAQ:SGMS) – Options on gaming technology and services provider, Scientific Games Corp., are seeing heavier trading traffic than usual today, with volume in excess of 1,100 contracts as of 12:40 p.m. ET, versus average daily options volume of just 91 contracts. Shares in Scientific Games Corp (NASDAQ:SGMS) are up better than 3.5% on the day to stand at $9.58. Some traders appear to be buying upside calls on the name to position for shares in Scientific Games Corp. to extend gains during the next few months. The April $10 strike calls are most active, with roughly 960 call options in play against previously existing open interest of 49 contracts. Most of the April $10 strike calls were purchased this morning for an average premium of $0.70 apiece, and may be profitable at expiration in the event that Scientific Games Corp (NASDAQ:SGMS) shares rally another 11.7% to top the average breakeven point at $10.70. Shares in Scientific Games Corp. last traded above $10.70 in May 2012.
Equity Options Analyst
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