IB Options Brief: Molycorp, Inc. (MCP) & Juniper Networks, Inc. (JNPR)

Posted August 28th, 2012 by Caitlin Duffy in Unusual Activity

MCP ñ Molycorp, Inc.
Shares in Molycorp are up 11.5% today at $10.61 after the rare earth metals mining company announced Monday it began operations at its Mountain Pass mine in California. Weekly call options on Molycorp are seeing the most volume in the first half of the trading session, with the Aug. 31 í12 $10 and $11 strike calls changing hands more than 6,000 and 5,000 times, respectively.

Open interest in the $10 call, now at 2,687 contracts, increased by 1,445 lots yesterday. Premium on these calls increased five-fold since the prior session, rising from a volume-weighted average price of $0.12 apiece on Monday, up to the current bid/ask of $0.61/$0.67 as of 12:40 p.m. ET.

Cheap, short-term upside calls traded around 400 times up at the Aug. 31 í12 $12 strike this morning, as well. It looks like traders paid around $0.02 per contract for the $12 calls, which may pay off at expiration should Molycorpís shares rally another 13% to exceed the breakeven price of $12.02. Overall options volume on the name is approaching 28,000 contracts, with roughly 3.5 calls changing hands on the stock for each single put option in play, as shares continue to push higher this afternoon.

JNPR ñ Juniper Networks, Inc.
Call activity on Juniper Networks this morning suggests at least one options trader is positioning for the price of the networking equipment and services provider to rally into October expiration. Shares in JNPR are up 3.1% this afternoon at $18.30 as of 12:15 p.m. ET. The stock started to slide in February, falling more than 40% from a 2012 high of $25.04 down to a 52-week low of $14.01 on the 17th of July. Juniperís fortunes started to change in recent weeks, with the stock up better than 30% off the July low.

Upside calls looking for shares in Juniper Networks to extend gains in the near term are most active at the Oct. $19 strike today, with around 5,000 contracts in play versus open interest of 2,296 positions. It looks like most of the $19 calls were purchased for an average premium of $0.66 apiece early in the trading session, positioning buyers to make money in the event JNPR shares climb 7% to top $19.66 by October expiration.

--------------------------------------------------------------

Note: The material presented in this commentary is provided forinformational purposes only and is based upon information that isconsidered to be reliable. However, neither Interactive Brokers LLC norits affiliates warrant its completeness, accuracy or adequacy and itshould not be relied upon as such. Neither IB nor its affiliates areresponsible for any errors or omissions or for results obtained from theuse of this information. Past performance is not necessarily indicativeof future results.

This material is not intended as an offer or solicitation for thepurchase or sale of any security or other financial instrument.Securities or other financial instruments mentioned in this material arenot suitable for all investors. Any opinions expressed herein are givenin good faith, are subject to change without notice, and are onlycorrect as of the stated date of their issue. The information containedherein does not constitute advice on the tax consequences of making anyparticular investment decision. This material does not take into accountyour particular investment objectives, financial situations or needsand is not intended as a recommendation to you of any particularsecurities, financial instruments or strategies. Before investing, youshould consider whether it is suitable for your particular circumstancesand, as necessary, seek professional advice.