CS - Credit Suisse Group – Trading
traffic in Credit Suisse options this morning suggests some traders are
positioning for shares in the name to rally in the near term. The stock
kicked off the final trading session of the week in rally-mode, helped
higher by an upgrade to ‘overweight' from ‘equalweight' at Morgan
Stanley. But, shares have since surrendered gains, trading flat at
$28.16 as of 11:00 a.m. ET. The most active contracts on CS this morning
are the Feb. $28 strike in-the-money call options, with roughly 5,000
lots in play versus open interest of 885 contracts. Traders shelled out
an average premium of $1.11 per contract to buy the $28 strike calls,
and may profit at expiration next month should shares in the financial
services provider rally 3.4% to exceed the effective breakeven price of
$29.11. Credit Suisse is scheduled to report fourth-quarter earnings on
Thursday, February 7th, prior to the opening bell.
HUN - Huntsman Corp. – A big print
in Huntsman Corp. put options pushed the maker of chemical products onto
our ‘hot by options volume' market scanner in the early going on
Friday. Shares in HUN are currently down 0.70% on the day to stand at
$17.57 as of 11:15 a.m. in New York trading. The single-largest
transaction in options on Huntsman appears to be disaster insurance on
the name, or protection against a sharp adverse move in the price of the
underlying through May expiration. It looks like one strategist
purchased roughly 18,000 puts at the May $12 strike for a premium of
$0.20 apiece. The contracts make money at May expiration if shares in
Huntsman Corp. plunge 33% from the current price of $17.57 to settle
below the effective breakeven point at $11.80. Shares in Huntsman, up
nearly 50% during the past six months, last traded below $11.80 in July
2012. The chemical company is scheduled to report fourth-quarter
earnings in mid-February.
MS - Morgan Stanley – Shares in
Morgan Stanley are soaring today, rising as much as 8.25% to an intraday
and new 52-week high of $22.46, after the financial services firm
posted stronger-than-expected fourth-quarter earnings ahead of the
opening bell this morning. The better-than-expected earning report and
subsequent reaction in the price of the underlying sparked active
trading in out-of-the-money call options on MS this morning. Traders
positioning for shares in the name to extend gains in the near term
snapped up more than 3,600 calls at the Jan. 25 '13 $22.5 strike for an
average premium of $0.15 apiece. Buyers of the $22.5 strike weekly calls
stand ready to profit at expiration next week should MS shares settle
above the average breakeven price of $22.65. Bullish trading spread to
the February expiry calls, with fresh interest building in several
out-of-the-money striking prices. Call buying at the Feb. $23, $24 and
$25 strikes indicates a number of traders are positioning for further
upside in shares of Morgan Stanley. The overall call-to-put ratio on the
stock is currently above 1.6, while volume in excess of 133,000
contracts stands well above the stock's average daily level of around
86,400 contracts, as of 11:45 a.m. ET.