(By Caitlin Duffy) Fortune Brands Home & Security, Inc. (FBHS)– Shares
in the home and security products company that was spun off from
Fortune Brands in 2011 are up 4.5% this morning at $23.27. Call options
on the company, which sells products under well-known brands including,
Master Lock and Moen, among others, are more active than usual today.
Trading traffic in the August expiry calls suggests one or more
investors may be positioning for the price of the underlying to rally to
the highest level since the spin off. Upwards of 1,000 calls changed
hands at the Aug. $25 strike versus previously existing open interest of
105 contracts. It looks like most of the calls were purchased for a
premium of $0.40 apiece. Call buyers may profit at expiration next month
should shares in FBHS rally another 9.2% to surpass the breakeven price
of $25.40. Fortune Brands Home & Security is scheduled to report
second-quarter earnings after the close of trading on July 25th.
Oracle Corp. (ORCL) – A large
bearish spread initiated in Oracle Corp. options this morning sees
shares in the name potentially pulling back more than 20.0% from the
current level during the second half of the year. Shares in Oracle are
down 0.75% as of midday to stand at $29.47, returning some Friday's more
than 5.0% rally in the stock. It looks like one strategist initiated a
9,000-lot Dec. $23/$28 put spread, the largest blocks printing 7,622
contracts in the first 30 minutes of the trading week, for a net premium
outlay of $1.08 apiece. Profits kick in on the position should shares
in Oracle Corp. decline 8.7% to breach the breakeven price of $26.92,
while maximum possible profits of $3.92 per contract are available
should the stock drop 22.0% to $23.00 by December expiration. The put
spread is the largest trade in Oracle options so far today. The
transaction could be a hedge to protect the value of a long position in
the shares or an outright bearish stance on the stock over the next six
months. Oracle was raised to ‘Outperform' at RBC Capital Markets on
Friday.
Waste Management, Inc. (WM) – Heavy
put buying on the Houston, Texas-based provider of waste management
services pushed Waste Management, Inc. onto our ‘hot by options volume'
market scanner this morning, with options volume on the name up 945% at
23,375 contracts versus average daily volume of 2,473 contracts. Shares
in WM are down 1.0% at $33.07 as of 12:20 p.m. in New York. Nearly all
of the action in Waste Management options is in the August expiry puts,
where the $33, $32, $31 and $31 strikes attracted the bulk of the
volume. The Aug. $31 strike put is most active, with upwards of 10,100
contracts in play versus open interest of 157 lots. More than 5,000 put
options changed hands at both the Aug. $30 and $33 strikes, while the
$32 put traded approximately 3,100 times. The transactions appear to be
opening positions in all cases give current open interest levels. The
trader or traders responsible for the put activity on Waste Management
today may be securing downside protection ahead of the company's July 26
second-quarter earnings report.