UPS - United Parcel Service, Inc. – Shares
in UPS are off their lows of the session this afternoon, down just
0.05% to stand at $76.28 as of 12:20 p.m. ET. The stock joined in the
strong broad-based rally in equities this week after U.S. lawmakers
finally came to a last-minute agreement to avoid drastic spending cuts
and tax increases. Options traders positioning for shares in UPS to
increase significantly during the first half of this year appear to be
picking up July expiry calls. It looks like traders exchanged upwards of
10,900 calls at the July $77.5 strike this morning versus open interest
of 3,731, and purchased most of the contracts for an average premium of
$2.73 apiece. Call buyers stand ready to profit at July expiration
should shares in UPS increase more than 5% to top the average breakeven
price of $80.23. Shares in the name last traded above $80.23 in July
2012. UPS reports fourth-quarter earnings four weeks from today.
MAT - Mattel, Inc. – Toy maker,
Mattel, Inc., popped up on our market scanners today following heavy
volume in the February expiry put options. Shares in the name are
currently down 0.30% on the day to stand at $36.70, but closed out 2012
up better than 30% for the year. Some of the trading traffic in MAT puts
today may be the work of strategists locking in gains and bracing for
possible declines in the price of the underlying after the company
reports fourth-quarter earnings at the end of January. Traders exchanged
approximately 2,100 in-the-money puts at the Feb. $38 strike, buying
most of the contracts at an average premium of $2.00 apiece. These
contracts start making money if shares in Mattel dip below the average
breakeven price of $36.00 by expiration next month. The Feb. $36 strike
calls are in play today as well, with around 1,800 lots purchased for an
average premium of $0.97 each. Traders long the $36 strike put options
may profit at February expiration should Mattel's shares slide 4.6% from
the current level to breach the average breakeven price of $35.03.
Finally, put volume on Mattel today is greatest at the Feb. $37 strike
where two blocks of 2,500 put options each changed hands against open
interest of 85 contracts.
SGMS - Scientific Games Corp. – Options
on gaming technology and services provider, Scientific Games Corp., are
seeing heavier trading traffic than usual today, with volume in excess
of 1,100 contracts as of 12:40 p.m. ET, versus average daily options
volume of just 91 contracts. Shares in SGMS are up better than 3.5% on
the day to stand at $9.58. Some traders appear to be buying upside calls
on the name to position for shares in Scientific Games Corp. to extend
gains during the next few months. The April $10 strike calls are most
active, with roughly 960 call options in play against previously
existing open interest of 49 contracts. Most of the April $10 strike
calls were purchased this morning for an average premium of $0.70
apiece, and may be profitable at expiration in the event that SGMS
shares rally another 11.7% to top the average breakeven point at $10.70.
Shares in Scientific Games Corp. last traded above $10.70 in May 2012.