Today’s Bullish Trading
Apple Computer (AAPL) is seeing a flurry of activity on expiration Friday. The stock touched new 52-week lows of $385.1 this morning, but has since rebounded and is up $5.67 to $397.72 on heavy volume of 12.6 million shares. Options volume is approaching a half million contracts. 260,000 calls and 209,000 puts so far. 325,000 contracts, or almost 70 percent of the volume, is in the April contracts that will expire after today. April 400 calls and 395 puts, which are both out-of-the-money with AAPL at these levels, are seeing heavy trading. The 400 calls have traded more than 53,000 contracts. If the stock holds below $400 through end of business today, those calls expire worthless. If AAPL moves north of $400, the intrinsic value of the contract at expiration is equal to the stock market’s closing price minus the strike price of the option.
GNC Holdings (GNC), a Pittsburg, PA retailer of health products, is up 41 cents to $42.22 and options volume is running 6x the daily average, being driven by a May 42.5 ? 45 (1X2) call ratio spread for 10 cents, 3000X. The investor bought 3,000 May 42.5 calls on GNC for $2.10 and sold 6,000 May 45 calls at $1, according to a source on the exchange floor. The activity appears to be new positioning, as volume exceeds open interest in both contracts. If so, the advanced options strategy appears to be expressing confidence that the stock will be moving towards $45 through the May expiration.
Today’s Bearish Trading
CenturyLink (CTL), a Monroe, LA communications company, is up 40 cents to $37.24 and options volume on the stock is running 3X the daily average. About 14,000 puts and 2,000 calls so far. The put activity is highly concentrated in May 35s, where nearly 13,000 contracts changed hands. The top trade in CTL is an 8000-lot of May 35 puts traded for 40 cents per contract on the all-electronic International Securities Exchange [ISE]. An investor bought the puts, to open, according to data from ISE. The put buying might be related to the company’s earnings, due out early-May. The stock dropped 22.6 percent when CTL last reported on 2/14.
Warner Chilcott (WCRX) is down 3 cents to $13.76 and options volume on the Irish pharmaceutical company is running 3X the daily average. 3,550 puts and 340 calls so far. The biggest trade is a 1750-contract block of May 13 puts for 30 cents per contract on ISE and an opening buyer, according to ISEE data. 3,029 contracts now traded, as some investors are possibly taking protective put positions in WCRX ahead of the company’s earnings, due out early-May.
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