Alcon, Inc. (ACL) –
Medical supplies producer, Alcon, attracted long-term bullish option
traders to the May 2010 contract. Shares slipped slightly lower by 0.5%
to $144.02 by noontime (EDT). It looks as though one investor financed
the purchase of a call spread by selling put options. The three-legged
trade involved the sale of 4,200 puts at the May 120 strike for about
4.20 apiece. Next, the investor purchased the same number of call
options at the May 155 strike for 7.25 each, spread against the sale of
4,200 calls at the higher May 165 strike for 4.50 per contract. The
trader receives a credit of 1.45 each on the strategy. The full credit
is retained by the investor as long as shares of ACL remain higher than
$120.00 through expiration in May. Additional profits accumulate if the
stock surges 7.5% to surpass the breakeven point at $155.00. Maximum
additional profits available to the investor amount to 10.00 per
contract, attainable if shares add 15% to $165.00 ahead of expiration
in May.
CBOE Vix index (VIX) –
With equity prices sadly wilting by noon on Friday, investors were
threatening to completely reverse Thursday's giddy 2% advance. Traders
were despondent after a 0.5% drop in consumer spending last month,
which soured the tone following Thursday's stimulus-stuffed GDP gain.
The fear-gauge expanded by 8% to 26.70 as a result and one large
options player appears to have placed a trade suggesting that
volatility will be omnipresent – at least through year-end. The
investor sold 10,000 December expiration puts at the 25 strike for a
1.75 premium, while buying half as many puts in the January expiration
at the same strike. If the underlying Vix index settles at expiration
above a value of the 25 strike price, the puts would expire worthless.
This suggests this investor sees a rocky close to the year with
volatility remaining elevated. The purchase of 5,000 puts for a 1.95
premium expiring 30 days later suggests the investor sees a calmer
start to next year.
AgFeed Industries, Inc. (FEED) –
Shares of the Chinese feed and commercial hog producing company are
trading 2.5% higher today to stand at $4.73. The firm received a ‘buy'
recommendation at EVA Dimensions yesterday. Option traders took to the
May 2010 contract to initiate bullish positions on the stock.
