(By Caitlin Duffy) O'Reilly Automotive, Inc. (ORLY) – Shares
in auto parts retailer, O'Reilly Automotive, are facing double-digit
declines today after the company cut its second-quarter same-store sales
projection and said earnings for the quarter are likely to come in at
the low end of their previously estimated $1.13 to $1.17 a share range.
The stock is off the lows of the session, down 15.0% at $81.97 just
before midday in New York after earlier sliding as much as 21.5% to an
intraday and six-month low of $75.61. The sharp pullback in O'Reilly
shares today appears to have attracted contrarian players to the front
month calls. Traders positioning for the price of the underlying to
rebound in the near term snapped up at least a few hundred calls at the
July $80 strike for an average premium of $1.93 apiece this morning. The
intraday improvement in the share price during the first half of the
session now sees these calls changing hands at $4.30 apiece. Similar
bullish positioning is building in the July $85 strike calls, as well.
It looks like traders purchased roughly 600 of the $85 calls for an
average premium of $0.65 apiece in the first few hours of the trading
day, contracts that now tout an asking price of $1.65 each. Call buyers
may walk away with big profits at expiration should O'Reilly
Automotive's shares continue to recover during the next few weeks. The
front month calls expire the week prior to ORLY's second-quarter
earnings report on July 25th.
Merck & Co., Inc. (MRK)– Call
options on Merck & Co. are active today as shares in the drug maker
tack on 1.7% to trade at a near multi-year high of $40.73. The stock
has climbed roughly 10.0% since the first of the month. Substantial
volume is building in the Aug. $42 strike call where approximately
20,000 lots changed hands by 12:45 p.m. in New York, versus open
interest of just 701 contracts. A large block of 13,000 of the $42
strike calls were purchased this morning by one strategist for a premium
of $0.42 apiece. The position may be profitable at expiration should
shares in Merck rally another 4.1% to $42.42, a price-level last visited
by the stock back in March 2008. The Aug. $42 strike calls are not the
only contracts to see heavy trading traffic today. Overall options
volume on MRK is greater than 60,000 contracts at present, with around
32 calls trading for each single put option in play on the stock today.
The pharmaceuticals firm is scheduled to report second-quarter earnings
ahead of the opening bell on July 27th.
MetroPCS Communications, Inc. (PCS) – Call
buying on the wireless provider today suggests at least one options
player sees the potential for shares to improve this summer. Shares in
PCS, trading near multi-year lows, are up 2.15% this afternoon at $5.71.
Bullish positioning on the stock may be a profitable move should shares
rally substantially following the company's second-quarter earnings
report on July 26th. The most active contracts on MetroPCS today are the
Aug. $7.0 strike calls that changed hands 1,300 times against open
interest of 362 contracts. It looks like most of the calls were
purchased within the first 15 minutes of the trading day at a premium of
$0.20 each. Call buyers make money at expiration should the price of
the underlying jump 26.0% to surpass the effective breakeven price of
$7.20. MetroPCS shares last traded above $7.20 in May.