(By Andrew Wilkinson) AT&T, Inc. (T)– U.S. equities
are on the decline as Europe's woes once again take center stage. Shares
in AT&T, down 0.90% at $33.24 this afternoon, are faring better
than most of the other Dow components so far, though options activity on
the wireless carrier suggests some strategists are bracing for further
declines ahead of the long weekend. Traders exchanged more than 6,800
puts at the May 25 '12 $33 strike against open interest of 646 open
positions, and appear to have purchased the bulk of the volume at an
average premium of $0.17 apiece. Bearish positions in the $33 strike
weekly puts may be profitable at expiration should shares in AT&T
settle below the average breakeven price of $32.83.
CurrencyShares Euro Trust (FXE) – Bearish
positions initiated yesterday in FXE options are worth far more on
Wednesday as the Euro, and of course the Euro Currency Trust that
mirrors its performance, continue to slide on fears Greece may leave the
euro. Traders betting on further weakness in the currency on Tuesday
picked up around 1,000 of the May 25 '12 $125 strike puts for an average
premium of $0.16 apiece. As of Wednesday afternoon just before 12:30
p.m. ET, these same contracts cost $0.60 apiece, or nearly four times as
much. Overnight profits are also available for those effectively taking
a short position in the currency on Tuesday. Buyers of around 1,000
deep in-the-money put options at the $127 strike for an average premium
of $0.71 apiece yesterday could currently sell those contracts at $2.10
apiece for a net gain of nearly 200.0% on the position. The FXE
currently trades 0.96% lower on the day at $124.96 as of 1:10 p.m. in
New York.
Owens-Illinois, Inc. (OI) – The
maker of glass containers for brewers, vintners, distillers and food
producers popped up on our ‘hot by options volume' market scanner this
morning due to heavier than usual activity in the August expiry
contracts. Shares in Owens-Illinois have lost nearly 25.0% of their
value in the past four weeks and are being hit hard again today,
currently down 3.5% at $18.95 as of 1:00 p.m. in New York. But, it looks
like one or more options traders are positioning for the price of the
underlying to potentially rebound this summer. More than 3,500 calls are
in play at the Aug. $21 strike versus open interest of just four
contracts. It appears most of the contracts were purchased for an
average premium of $0.88 apiece, thus positioning call buyers to profit
in the event shares in OI soar 15.5% in the next few months to exceed
the average breakeven price of $21.88 at August expiration. Shares in
Owens-Illinois traded above $21.88 as recently as last week.