Call spread looks for upside in Cliffs shares

Alcatel Lucent SA (NYSE:ALU) – Mobile and broadband networking services provider, Alcatel-Lucent, appeared on our ‘hot by options volume’ scanner after a large block of put options changed hands in the January 2014 expiry. Shares in ALU increased 12% today to $1.23 after the French company secured a $2.1 billion financing deal underwritten by Goldman Sachs and Credit Suisse. One options player appears to be placing a floor on shares in Alcatel Lucent SA (NYSE:ALU) over the next year, selling 10,000 puts at the Jan. 2014 $1.0 strike for a premium of $0.25 per contract. The put seller keeps the full amount of premium received on the transaction as long as shares in Alcatel Lucent SA (NYSE:ALU) exceed $1.00 at expiration, but could have one million shares of the underlying stock put to him or her at an effective price of $0.75 a share in the event the contracts land in-the-money at expiration in 2014. Alcatel-Lucent shares dipped below $1.00 as recently as the 21st of November.

Caitlin Duffy

Equity Options Analyst

The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.