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Options Intelligence Report: Xyratex's Earnings Forecast Inspires Bullish Options Activity

 April 01, 2010 03:13 PM
 


Xyratex, Ltd. (XRTX) – Shares of the provider of data storage and network technology surged 13.7% at the start of the trading session to a new 52-week high of $19.25 after the firm said it anticipates earnings per share of at least $1.10 in the second quarter. The company's earnings forecast is significantly greater than the consensus estimate of $0.76 per share. The wear-and-tear of the trading session parsed some of the early-morning rally, but Xyratex's shares are still up 9.50% to $18.56 as of 2:45 pm (ET). Bullish investors prepared for continued appreciation in the price of the underlying by purchasing 1,100 calls at the June $20 strike for an average premium of $1.49 apiece. Call-buyers at this strike profit only if shares surge 15.8% from the current price of $18.56 to exceed the effective breakeven point at $21.49 by expiration day in June. Options traders exchanged 5,025 contracts on the stock during the trading day, which is nearly on par with total existing open interest on XRTX of 5,656 contracts.

[Related -Ford Motor Company (F): What To Watch In Q4 Results?]

Exelixis, Inc. (EXEL) – Bullish options trading tactics were employed on the biotechnology company this afternoon as the firm's shares surged 11.7% to an intraday high of $6.78. It looks like one investor sold 5,000 puts short at the November $5.0 strike price to take in an average premium of $0.40 per contract. The put seller keeps the full premium received on the transaction as long as shares of Exelixis trade above $5.00 through expiration day in November. By selling the put contracts, the investor implies he is willing to have shares of the underlying stock put to him at an effective price of $4.60 each in the event that the put options land in-the-money at expiration. The jump in options activity on the stock and the shift in share price lifted the overall reading of options implied volatility on Exelixis 42.2% to 82.1% in the final hours of the trading week.

[Related -United States Steel Corporation (X): Small Insider Buy, Big Rewards?]

Petroleo Brasileiro SA (PBR) – A debit call spread enacted on Brazilian oil and gas company, Petroleo Brasileiro, suggests one investor is positioning for continued bullish movement in the price of the underlying stock through July expiration. PetroBras' shares rallied 1.9% late in afternoon trading to stand at $45.35 as of 2:30 pm (ET). The optimistic options trader purchased 2,500 calls at the July $46 strike for an average premium of $2.61 apiece, and sold the same number of calls at the higher July $47 strike for a premium of $2.17 each. Net premium paid for the transaction amounts to $0.44 per contract, thus yielding maximum potential profits of $0.56 to the bullish player if PBR's shares rally 3.65% from the current price to $47.00 ahead of expiration day in July.

Ford Motor Co. (F) – The Dearborn, MI-based automaker's shares recovered a portion of the previous session's 5.5% decline today after the company said its sales in China surged 84% in the first quarter on increased demand for passenger cars and commercial vehicles. Ford's shares are currently trading 2.4% higher on the day to stand at $12.87 as of 11:55 am (ET).


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