Today’s tickers: RDWR, AUY, AMR, VOLC, EWZ, QLGC & JCP
RDWR – Radware Ltd. – Speculation that Radware is in talks to be sold to either Hewlett-Packard or IBM sent shares of the Application Delivery solutions provider flying this afternoon. Shares of the Tel Aviv-based company surged as much as 41.6% to $39.46, the highest recorded price in well over 5 years time, due to rumors RDWR could be purchased for approximately $945 million, or $45 per share. Not surprisingly, options traders reacted by initiating bullish stances on the stock. Traders purchased at least 3,200 in-the-money calls at the September $35 strike, the highest strike price currently available on RDWR, for an average premium of $3.30 each. Investors long the calls make money if Radware’s shares exceed the average breakeven price of $38.30 through September expiration day. Other bulls sold roughly 1,600 puts at the September $30 strike to pocket premium of $0.45 per contract. Put sellers keep the full premium received on the sale as long as Radware’s shares exceed $30.00 through expiration on Friday. Investors short the puts are apparently happy to have shares of the underlying stock put to them at an effective price of $29.55 each in the event the puts land in-the-money at expiration.
AUY – Yamana Gold, Inc. – Shares of the gold producer Yamana Gold, Inc., surged along with other gold mining firms today as gold futures jumped to an all-time high of $1272.00 per ounce. Yamana’s shares rallied as much as 5.3% to touch an intraday high of $10.65 as of 12:45 pm ET. One options player populating the January 2011 contract is positioning for the price of the underlying stock to appreciate significantly ahead of expiration. The investor enacted a bull call spread, buying 2,500 calls at the January 2011 $12.5 strike at a premium of $0.34 each, and selling the same number of calls at the higher January 2011 $15 strike for premium of $0.09 apiece. Net premium paid to establish the spread amounts to $0.25 per contract. The trader makes money if Yamana’s shares surge 19.7% over today’s high of $10.65 to trade above the effective breakeven price of $12.75 by expiration day. Maximum potential profits of $2.25 per contract are available to the gold-bull should shares of the gold producer rally 40.8% to exceed $15.00 by January expiration. The stock’s overall reading of options implied volatility is currently up 5% at 36.94%…
