Motorola Inc. (MOT) –
The Shares are almost 8% higher at $7.20 on the news that the company
will split into two with networks on one side and mobile devices on the
other. Shares are on the move because this probably reflects
management's confidence in the turnaround for mobile devices. It
appears that one option investor is looking for further upside and
placed a 20,000 lot call option spread when shares were trading at
about $6.95 this morning. The spread involved the purchase of now
in-the-money April call options at the $6.00 strike, which cost $1.12.
The buyer sold the same amount of $9.00 strike calls expiring at the
same time for 7 cents to reduce the breakeven to $7.05 in two months.
It is likely that this investor wants to take a stake in the company
now that it's announced this corporate split and as long as Motorola's
shares stay north of $6.00 in April, he will be able to exercise that
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Allstate Corp. (ALL) –
Looks like a substantial amount of call option buying in the home and
auto insurer today as its share price holds up relatively well in the
face of a 1% loss for the major market averages. At $29.36 shares are
off by just a nickel, possibly still sheltered by a 22.7% surge in
revenue and earnings that exceeded investor hopes earlier in the week.
Call option buying at the April expiration $31 strike has so far
totaled more than 22,000 contracts. Buyers paying around 65 cents per
contract for rights to get long of shares in the insurer should they
rally by more than 5.6% in the next nine weeks are clearly banking on a
rebound to the January peak above $31.50. Implied volatility has
slumped in the aftermath of earnings further eroding the premiums today.
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Buffalo Wild Wings Inc. (BWLD) –
An earnings miss earlier in the day from the Minneapolis-based
restaurant operator attracted option investor attention today. The
activity is curious simply because it's contrarian. The share price
slumped more than 12% earlier to $41.28 before steadying to $43.00. The
decline in options implied volatility to 37% is twice the decline in
the share price and is perhaps behind investors willingness to write
almost 2,000 put options at the soon to expire February $40 strike.
Premium sellers, who would have to buy shares at a fixed $40 each by
expiration next weekend, were keen to bear that risk by taking in the
available 70 cents per contract pushing premiums lower all morning.
These are currently offered at just 25 cents as volatility declines and