Overstock.com, Inc. (NASDAQ:OSTK) – Shares in Overstock.com, Inc. (NASDAQ:OSTK) are spiking for a second-consecutive session, helped higher today by an upgrade to ‘buy’ from ‘underperform’ at Bank of America Corp (NYSE:BAC)-Merrill Lynch. The off-price online retailer rallied 22% to $19.25 this morning, adding to the 36% increase in the price of the underlying during Thursday’s trading session following the company’s better-than-expected first-quarter earnings report released ahead of the open yesterday. Options changing hands on Overstock.com indicate some traders are positioning for shares to extend gains in the near term. Upwards of 1,500 calls have traded at the May $20 strike versus zero open interest, with much of the volume purchased in the early going at an average premium of $0.48 apiece. Call buyers stand ready to profit at expiration should shares in Overstock.com, Inc. (NASDAQ:OSTK) settle above the average breakeven price of $20.48. Fresh interest is also on the rise in the $20 strike call options expiring in June and September. Positions established in the April $15 strike call and put options yesterday are generating profits for some options players today. Open interest in the $15 strike puts jumped by around 860 contracts overnight, and a review of Thursday’s trading activity indicates most of the puts were sold at a premium of $0.30 each. The puts are now far out-of-the-money, suggesting put sellers are likely to walk away with the full amount of premium received at expiration. Finally, April $15 strike calls purchased yesterday at $0.24 each are today changing hands at $3.90 apiece as of the time of this writing.
Capital One Financial Corp. (NYSE:COF) – Trading traffic in weekly call options on Capital One Financial Corp. (NYSE:COF) suggests one or more traders are gearing up for shares in the name to extend gains in the near term. Shares in Capital One Financial Corp. (NYSE:COF) are up more than 6.0% in early afternoon trading to stand at $56.10 after the company reported first-quarter earnings that exceeded analyst expectations following the close of trading on Thursday. Upside call buying in the weeklys looks for shares to continue higher, with the April 26 ’13 $55 strike calls changing hands 1,300 times versus open interest of 48 contracts. It looks like most of the $55 calls were purchased for an average premium of $0.84 each in the early going this morning. Traders long the calls at $0.84 are already seeing the value of the contracts move in their favor, with the last traded price on the contracts up at $1.40 as of 12:25 p.m. ET. Profits are available at expiration if shares in Capital One Financial Corp. (NYSE:COF) settle above the average breakeven price of $55.84. Meanwhile, traders with perhaps a less rosy outlook on Capital One Financial Corp. (NYSE:COF) shares during the next five trading sessions appear to have purchased around 420 of the April 26 ’13 $52.5 strike put options at a premium of $0.15 each. These contracts make money at expiration if the price of the underlying pares post-earning gains to trade below an effective breakeven price of $52.35.
