Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

iRobot Corporation (IRBT) Bulls Clean Up As Shares Soar After Earnings

It's Time to Buy These 2 Defense StocksiRobot Corporation (NASDAQ:IRBT) – Shares in the maker of home robots such as the Roomba vacuum cleaner and defense and security robots for military uses are soaring on Wednesday, up as much as 17% to touch a new 52-week high of $28.85, after the company posted first-quarter earnings and sales that exceeded analyst expectations. The sharp move in the price of the underlying sparked heavy trading traffic in iRobot Corporation (NASDAQ:IRBT) options in the early going. Bullish bets initiated yesterday on iRobot Corporation (NASDAQ:IRBT) prior to the company’s earnings release are generating sizable paper profits for some traders today. It looks like traders yesterday snapped up around 500 calls at the May $25 strike for an average premium of $1.35 per contract. The sharp rally in the price of the underlying overnight now finds the contracts changing hands at $3.50 apiece as of 11:40 a.m. ET. Options traders establishing near-term bullish bets on iRobot Corporation (NASDAQ:IRBT) today looked to the May $30 strike and purchased around 350 calls for an average premium of $0.49 each during the first half of the trading session. Finally, buyers of downside put options yesterday prior to the earnings release saw the value of their contracts collapse overnight. More than 600 puts were purchased at the May $25 strike on Tuesday for an average premium of $1.78 per contract. Double-digit percentage gains in the share price today now finds the price tag on the $25 puts down at $0.20 each as of the time of this writing.

American International Group, Inc. (NYSE:AIG) – Upside call options are changing hands on American International Group, Inc. (NYSE:AIG) today as shares in the name rally for a second-consecutive session on speculation the insurer may resume dividend payments. Life insurer, Metlife Inc (NYSE:MET), yesterday announced it would increase its quarterly dividend for the first time since 2007. Shares in American International Group, Inc. (NYSE:AIG) are up more than 3.0% this afternoon at a new two-year high of $41.88 as of midday in New York. The company reports first-quarter earnings next Thursday. Trading traffic in weekly options on American International Group, Inc. (NYSE:AIG) indicates some strategists are positioning for the price of the underlying to continue higher during the next couple of trading sessions. Volume in weekly options is greatest at the Apr 26 ’13 $41.5 strike where upwards of 2,000 calls have traded against open interest of 658 contracts. Time and sales data suggests the bulk of the $41.5 strike calls were purchased for an average premium of $0.35 each. Call buyers may profit at expiration this week in the event that AIG’s shares top the breakeven price of $41.85.

Corning Incorporated (NYSE:GLW) – Shares in high-performance glass manufacturer, Corning Incorporated (NYSE:GLW), rallied 5.0% today to $13.82 after the company reported first-quarter profit that exceeded average analyst estimates, increased its quarterly dividend by one penny and announced a $2 billion stock-buyback plan. Big prints in August expiry calls today, however, suggest the stock, which today trades at the highest level since October of 2012, bet the shares are unlikely to breakout front here during the next four months. It looks like one trader sold around 65,000 calls at the Aug $14 strike, pocketing an average premium of $0.49 per contract. The strategist keeps the full amount of premium as long as the calls expire worthless at August expiration. Perhaps the call seller is long the stock, and willing to have a hefty chunk of shares called from him or her at expiration. Shares in Corning Incorporated (NYSE:GLW) bumped up against resistance in the mid-$14 level around this time last year and have not managed to top $14.00 since May of 2012.

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.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.