ADS – Alliance Data Systems, the Dallas-based manager of retail credit cards, ticked our data screens after options volume surged to more than 8 times the average level. This occurred even as shares traded flat on the session at $77.59. Yesterday the company’s share price faltered on rumors that Blackstone Group might seek a lower price on its $7.8 billion takeover agreement. Most of the options trading today were logged to the middle of the market, with December calls at strikes of 75 fetching $4.90. Calls at the 80 strike traded for $1.00, while put traders concentrated on strikes 65 and 70.
HA – Implied volatility in Hawaiian Holdings, the parent company behind Hawaiian Airlines, shot up nearly 72% this afternoon 91.5%, as its shares traded 2.2% higher at $5.05. Earlier this week the company went public with news of the largest single investment its history, purchase deals with Airbus and Rolls-Royce to replace and augment its 18-plane fleet with some 24 long-bodied aircraft. Options activity soared to 35 times the daily average on a combined volume of about 14,400 lots. This was seated in deep in-the-money 2.50 calls in the January and July contracts, with what appears to be an investor closing out at $2.65 a position in the January contract opened back in September at $1.80. The long position was then rolled to the July contract for about $3.20.
IKN – Options in Ikon Office Solutions are once again attracting an unusual level of attention from option traders, with contracts moving at more than 5 times the average volume as shares go nowhere at $12.60. The 10,600 options in play are equivalent to nearly a third of the total open interest, and are spread equally between puts and calls. On Wednesday, we noted heavy buying in the December 15 straddle, and it’s again at this strike where the option action is playing out today on volume of 5,300 lots at each side of the trade, both sides going to the middle of the market for a combined premium of $2.90.
JNY – We continue to monitor option action in Jones Apparel Group, the women’s shoe and apparel group behind brands including Nine West and Jones New York. Following the successful sale of its Barney’s chain of department stores earlier this year, the company is executing plans to phase out lower-margin sportswear divisions and last week announced plans to shut down its Anne Klein line. None of this appears to have placated option traders, emboldened in today’s session to sell calls at the December 20 strike. The activity has sent trading volume to 21 times the daily average. This is the highest level of call volume registered for Jones in more than a year, but the fact that they’re being sold can hardly come as consolation to hopeful bulls. The action occurred against the backdrop of a 1.4% gain for shares to $18.52.
