logo
  Join        Login             Stock Quote

Bear Put Spreads Take Shape In Netapp Ahead Of Earnings

 February 13, 2012 02:56 PM
 


NetApp, Inc. (NTAP) – Options on the supplier of enterprise storage and data management software and hardware products and services are among the most active by volume today. Bearish positions are accumulating in the front month, with debit put spreads comprising the majority of overall options volume in the name. Shares in NetApp are currently down 1.1% to stand at $39.25 as of 1:20 p.m. ET, three days ahead of the Company's third-quarter earnings report after the close on Thursday. The stock was cut to ‘hold' from ‘buy' with a share price target of $42.00 down from $54.00 at ThinkEquity today. It looks like one or more investors purchased the Feb. $34/$39 put spread roughly 9,000 times for an average premium of $1.85 per contract. Traders harnessing the strategy may be hedging long positions in the underlying shares or, alternatively, establishing outright bearish stances on the stock in the expectation that shares will pullback following earnings. Profits are available on the spread if shares in NetApp drop 5.35% to trade below the average breakeven price of $37.15. Put-spreaders could walk away with maximum potential profits of $3.15 per contract should NTAP's shares plunge 13.4% to settle below $34.00 at expiration.

[Related -Cisco Systems, Inc. (NASDAQ:CSCO): What Cisco May Add To Next-Gen UCS?]

Live Nation Entertainment, Inc. (LYV)– Put options on the live entertainment and eCommerce Company are more active than usual today, with more than 10 put contracts changing hands in the first half of the session for each single call option in play. Shares in the operator of Ticketmaster.com are up 0.90% at $10.82 just before 12:00 p.m. in New York. Traders may be snapping up put options on Live Nation Entertainment ahead of the Company's fourth-quarter earnings report next Thursday after the close. The April $10 strike saw the single largest transaction in LYV puts, with one investor buying a block of 9,577 of the contracts for a premium of $0.70 each. The put buyer may be taking an outright bearish stance on the stock through April expiration or hedging a long position in the underlying shares. If outright bearish, the investor stands prepared to profit in the event that Live Nation's shares drop 14.0% to breach the effective breakeven price of $9.30 by expiration. Put volume at the April $10 strike is greater than 11,600 contracts versus open interest of just 146 positions.

[Related -Why I Remain Bullish On Ezchip Semiconductor]

Seattle Genetics, Inc. (SGEN) – Shares in biotechnology firm, Seattle Genetics, Inc., are up 2.15% this afternoon at $19.00 ahead of the Company's fourth-quarter earnings report after the closing bell. The stock popped up on our ‘hot by options volume' market scanner in the first hour of the trading session due to heavier-than-usual activity in put options. Front month puts are the most actively traded contracts on Seattle Genetics thus far in the session, with the bulk of the volume changing hands at the Feb. $20 strike. It looks like one or more investors traded around 2,300 in-the-money puts at the $20 strike for an average premium of $1.60 per contract. A substantial portion of the puts were purchased, while the largest single trade – a block of 1,250 puts – traded to the middle of the market. Buyers of the put options may profit at expiration if SGEN's shares drop 3.2% to settle below $18.40. However, if the large block of puts were sold rather than purchased by the investor, a run-up in the price of the shares to $20.00 or above results in maximum possible profits of $1.60 per contract on the position.

iOnTheMarket Premium
Advertisement

Advertisement


Comments Closed


rss feed

Latest Stories

article imageChart Says This Retailer's Comeback Isn't Finished

One of the surprises, at least on the surface, of the market's recent swoon was the outperformance of read on...

article imageETF Performance Review: Major Asset Classes | 19 Dec 2014

It’s all about real estate investment trusts (REITs) these days when it comes to bullish performance among read on...

article imageOil and Global Stock Markets Rebounding Sharply

So far so good on our expectation of a 4 to 5% pullback and then a resumption of the bull read on...

article imageGrading the FOMC

Love its members or loathe them, you have to admire the gradual impact the policy-making committee has had read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.