Today’s tickers: HPQ, VAR, DOW, AMTD, XLF, WFC & BAC
HPQ Hewlett-Packard Company – The global technology company has enjoyed a more than 4% rally to $34.41 on broader market gains. HPQ edged onto our ‘most active by options volume’ market scanner after bullish option traders played the field. Optimism in options-land occurred amid news that HPQ was assigned an “overweight” rating by an analyst at Atlantic Equities LLP as well as a heightened target price of $44.00 per share. The first sign of optimism we noticed was the sale of 2,200 puts at the May 32.5 strike price for a premium of 1.00 apiece. But, the May transaction was merely small potatoes compared to what we observed in the January 2010 contract. At the January 35 strike, an appetizer of 4,500 calls was bought for 5.30 apiece ahead of the main course, a large bull call spread. The January 40 strike price saw the purchase of 20,000 call options for a premium of 3.10 each and spread against the sale of 20,000 calls at the January 50 strike for a premium of 87 cents. The net cost of the spread amounts to 2.23 and yields a maximum potential profit of 7.77 to the trader if shares can shoot up to $50.00 by expiration next year. HPQ’s shares have not traded above $50.00 since December 31, 2007. In order for this investor to breakeven at $42.23 where he would begin to amass profits on the spread, shares would need to rally by 23% from the current price.
VAR Varian Medical Systems, Inc. – The designer and manufacturer of advanced equipment and software utilized for the treatment of cancer has experienced a 6% rally to $33.28 amid supposed takeover chatter reported by some news sources today. Option volume of nearly 21,000 contracts has superseded existing open interest on the stock of just 19,785, indicating that there is certainly fresh interest a-brewing. Investors were seen picking up more than 4,600 call options at the April 35 strike price for an average premium of 47 cents apiece. Meanwhile, traders looked as high up as the May 40 strike price where some 2,600 call options were scooped up for about 68 cents per contract. Option implied volatility which started the day at around 49% has since gone through the roof and current stands at 65% for the day.
DOW The Dow Chemical Company – Shares of the global chemical…
