Ford Motor Company (NYSE:F) – What appears to be a large one-by-three ratio call spread on Ford suggests one options market participant is looking for sizable, albeit limited, gains in the price of the automaker’s shares during the next five weeks. Ford Motor Company (NYSE:F) shares are currently up 0.45% at $11.54 as of 12:55 p.m. ET. It looks like the options player purchased 25,000 calls at the Jan. 2013 $12.5 strike for a premium of $0.12 apiece, and sold 75,000 calls up at the $14 strike at a premium of $0.02 each. Net premium paid to establish the position amounts to $0.06 per contract and may be profitable in the event that Ford’s shares rally 9% off the current price to exceed the effective breakeven point at $12.56. Maximum potential profits of $1.44 per contract are available on the spread should shares in Ford jump more than 20% to settle at $14.00 at expiration next year. Shares in Ford Motor Company (NYSE:F) last traded above $14.00 back in July 2011.
YM BioSciences Inc. (NYSEAMEX:YMI) – Shares in the drug development company are up nearly 80% today at $2.89 after Gilead Sciences, Inc. agreed to purchase the Canadian biotechnology company in an all-cash deal valued at $510 million or $2.95 a share. Traders who purchased upside calls on YM BioSciences Inc. (NYSEAMEX:YMI) ahead of the deal saw the value of their contracts rise sharply along with the price of the underlying shares this morning. YM BioSciences Inc. (NYSEAMEX:YMI) call selling in the early going may be the work of traders taking substantial profits off the table. Time and sales data for transactions in the Dec. $2.5 strike calls back in November suggests traders purchased most of the 2,043 open contracts for an average premium of $0.05 apiece last month. The sale of at least 1,600 now in-the-money Dec. $2.5 strike calls this morning for an average premium of $0.40 each may mean traders are banking hefty gains that amount to eight times the original investment. Open interest in YM BioSciences Inc. (NYSEAMEX:YMI) options is largest in the Jan. 2013 $2.5 strike call, with a total of 3,894 open contracts. Traders on Monday and Tuesday of this week appear to have purchased most of the calls for an average premium of $0.13 each. Trading traffic in the $2.5 strike call this morning reveals much of the volume this morning was sold at a premium of $0.40 per contract.