AC - Bank of America Corp. – Bank
of America is one of the best performers in the Dow Jones Industrial
Average this morning, with shares trading up 3.8% on the session to
$10.28, the highest level since July 2011. Heavy call buying across
multiple near-term expiries indicates some options traders are
positioning for shares in the name to extend gains through year end.
Overall options volume on BAC is above 400,000 contracts as of 11:50
a.m. ET in New York, versus the stock's average daily options volume of
295,930 contracts. The bulk of the trading traffic is in Bank of America
call options, with the call-to-put ratio up above 3.5-to-1 in the first
half of the session. Fresh interest in out-of-the-money calls with two
full trading sessions remaining to expiration attracted buyers this
morning, with nearly 25,000 calls in play at the Dec. 07 '12 $10.5
strike against open interest of 2,940 contracts. Time and sales data
suggests most of the $10.5 strike calls were purchased for an average
premium of $0.03 apiece. Interest in the Dec. 14 '12 $10 and $10.5
strike calls is also on the rise this morning. Traders snapped up in-
and out-of-the-money Dec. 21 '12 expiry calls as well, paying an average
premium of $0.36 apiece for around 21,000 of the $10 strike calls, and
shelling out $0.05 per contract for roughly 10,000 calls at the $11
striking price, as of the time of this writing.
WWAV - WhiteWave Foods Co. – Options
on dairy and dairy alternative food products provider, WhiteWave Foods
Co., are more active than usual today, with noteworthy volume building
in the Jan. 2013 expiry puts. Shares in the maker of Silk® soymilk,
almondmilk and coconutmilk, and Horizon Organic milk and dairy products,
are up 0.80% on the session at $15.77 as of 12:15 p.m. ET, helped
higher in part by analyst coverage initiated on the stock at a number of
firms today. The bulk of the trading traffic in WWAV options today is
in the Jan. 2013 $15 strike put, where more than 550 contracts changed
hands this morning versus previously existing open interest of 40
contracts. It looks like one trader sold most of the volume for a
premium of $0.50 apiece. The put seller keeps the full amount of premium
as long as shares in WhiteWave exceed $15.00 through expiration next
month. Meanwhile, buyers of in-the-money calls at the Jan. 2013 $15 and
Apr. 2013 $15 strikes at premiums of $1.50 and $1.85 each, respectively,
stand ready to profit should the price of the underlying extend gains
heading into the New Year. Overall options volume on the stock stands at
920 contracts in early afternoon trade, substantial for stock that sees
average daily options volume of around 90 contracts.
SFD - Smithfield Foods, Inc. – Traders
appear to be snapping up put options on hog producer, Smithfield Foods,
Inc., ahead of the company's second-quarter earnings report prior to
the opening bell on Thursday morning. Shares in Smithfield are up better
than 2% this afternoon at $22.99 as of 12:40 p.m. on the East Coast.
Front month puts are most active, with fresh interest building across
multiple striking prices. Put volume is greatest at the Dec. $19 strike,
where some 2,200 contracts traded against open interest of just 115
positions. Time and sales indicates the bulk of the $19 strike put
options were purchased this morning for an average premium of $0.15
apiece. The put options may provide downside protection for an investor
long SFD stock, or could represent an outright bearish bet that shares
will drop sharply after earnings. The contracts make money at December
expiration if shares in Smithfield plunge 18% from the current level to
trade below the effective breakeven price of $18.85. The Dec. $21 strike
puts were also active in morning trading after one trader purchased
around 755 contracts for a premium of $0.40 apiece. The $21 strike puts
make money if shares in SFD decline 10.4% from the current price to
breach the breakeven point at $20.60 at expiration.