Valero Energy Corp. (VLO)– The
largest independent refiner in the U.S. is the biggest gainer in the
S&P 500 Index today, with shares in Valero Energy Corp. currently up
more than 7.6% at $27.09 as of 12:10 p.m. in New York. Options activity
on the San Antonio, Texas-based Company suggests traders are
positioning for the price of the underlying to extend gains in the
months ahead. April expiry calls attracted buyers today, with the $26
and $28 strike options seeing the most volume. Traders eyeing further
upside moves in the stock purchased most of the 2,200 $28 calls in play
for an average premium of $0.66 each. Call buyers profit at expiration
next month in the event that Valero's shares rally another 5.8% to
surpass the average breakeven price of $28.66. But, it looks like one
strategist trading VLO calls on Monday is already sitting on paper
profits given the positive price action since the options were
purchased. Call open interest in the April expiry is greatest at the $26
strike, with some 4,574 open positions. Most of these positions were
initiated in a block of 3,700 call options, purchased on Monday
afternoon for a premium of $1.05 per contract. These calls are now
trading at $1.95 apiece as of 12:30 p.m. ET, indicating the value of the
position has jumped roughly 85.0% in two days. Finally, the largest
transaction in Valero options was established within the first 20
minutes of the opening bell. One trader appears to have sold June $24
strike puts to offset the cost of getting long the June $27 strike
calls. The bullish position has the potential to become increasingly
profitable for the strategist as shares climb north of the $27-level.
Western Refining, Inc. (WNR) – Shares
in independent oil and gas company, Western Refining, Inc., are in
rally mode today, gaining less than Valero Energy Corp., but still
trading sharply higher by 4.3% to stand at $19.24 in early-afternoon
trade. Bullish options activity was seen across both names today, with
front month calls garnering the most action on Western Refining thus far
in the session. Volume is heaviest at the Mar. $20 strike, where more
than 4,460 calls changed hands against open interest of 1,714 contracts.
It looks like most of the calls were purchased for a premium of $0.25
a-pop, thus positioning buyers of the options to profit should WNR
shares rally another 5.25% to exceed the breakeven price of $20.25 at
expiration next week.
Tyson Foods, Inc. (TSN) – The
beef, pork and prepared foods producer attracted heavier-than-usual
traffic in call options today, with some traders positioning for the
price of the underlying to rise during the next six weeks. Shares in
Tyson Foods are up 1.7% at $19.50 this afternoon. Options on the food
company are most active in the April expiry, where the
closest-to-the-money contracts available changed hands more than 3,200
times. Most of these April $20 strike calls appear to have been
purchased for an average premium of $0.40 apiece. The investor or
investors holding the options are prepared to make money at April
expiration should Tyson's shares rally another 4.6% over the current
price of $19.50 to surpass the average breakeven price of $20.40. April
$21 and October $21 strike calls traded more than 1,000 times as part of
a spread. The chicken processor was upgraded to ‘Buy' from ‘Neutral'
with a 12-month target share price of $28.00 at Davenport yesterday, and
is scheduled to present at the Goldman Sachs 16th Annual Agricultural
Biotech Forum at 1:00 p.m. today.