Intel Corporation (NASDAQ:INTC) – Shares in the chip maker are in negative territory this morning, trading lower with the broader market on signs budget talks are stalling and lawmakers may not reach a deal by year end. Intel’s shares are down better than 2% to stand at $20.59 as of midday in New York. Fresh interest in weekly call and put options on the name this morning suggests traders are preparing for volatility in the price of the underlying through the end of 2012. Options players bracing for Intel’s shares to potentially fall sharply during the next four trading session snapped up around 1,000 puts at the Dec. 28 ’12 $20 strike and another 550 puts at the Dec. 28 ’12 $19.5 strike at premiums of $0.07 and $0.04 apiece, respectively. Traders long the $20 and $19.5 strike contracts may profit in the event that Intel’s shares drop roughly 3.2% and 5.5% to settle below the effective breakeven prices of $19.93 and $19.46 by expiration next week. Meanwhile, strategists holding out hope that a deal gets done and lifts equities in the near term appear to be purchasing upside calls today. The Dec. 28 ’12 $21 strike calls saw the most volume, with upwards of 5,000 contracts in play during the first half of the session. Time and sales data suggests the bulk of the volume was purchased for an average premium of $0.15 apiece. Buyers of the $21 strike calls profit at expiration as long as Intel’s shares rally 2.7% to settle above $21.15.
Halozyme Therapeutics, Inc. (NASDAQ:HALO) – Upside calls on biopharmaceutical company, Halozyme Therapeutics, Inc. (NASDAQ:HALO), are active today, with shares in the name rallying as much as 30% to $7.19 on Friday morning. The stock popped after Halozyme announced it will work with Pfizer to create up to six new injectable drugs. Options traders positioning for Halozyme Therapeutics, Inc. (NASDAQ:HALO)’s shares to extend gains during the next four weeks purchased around 250 calls at the Jan. 2013 $7.5 strike for an average premium of $0.37 per contract. Call buyers may profit at expiration next year should shares in the name increase 12% over the current price of $7.03 to surpass the average breakeven point at $7.87. The Mar. 2013 $7.5 strike calls are also active today, with 242 contracts in play as of 12:55 p.m. ET.
JPMorgan Chase & Co. (NYSE:JPM) – Trading traffic in weekly put options on JPMorgan Chase & Co. (NYSE:JPM) this morning suggests some strategists are preparing for shares to extend losses during the final four trading sessions of 2012. Shares in JPMorgan Chase & Co. (NYSE:JPM) are down 1.25%, off their lowest level of the day, to stand at $43.98 as of 1:00 p.m. in New York. The purchase of around 2,100 puts at the Dec. 28 ’12 $41.5 strike for a premium of $0.10 apiece in the early going indicates at least one strategist is bracing for the stock to pullback further. The puts may be profitable at expiration next week should shares in JPMorgan drop 6% to breach the effective breakeven point on the downside at $41.40.
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.