Here is an update of some of the key option activity for the week relating to some major companies.
Transocean LTD (RIG)
Transocean LTD (RIG), which provides offshore drilling services across the globe, has suffered due to an oil slick, caused by BP Plc (BP), sending their shares down by more than 8%.
This event started a surge in short-term option activity. Normally there are about 6,000 puts and 7,000 calls per session but Friday saw about 43,000 put and 45,000 call contracts executed.
SunPower Corporation (SPWRA)
SunPower Corporation (SPWRA) was bombarded on Wednesday, as the shares of the solar concern tumbled to a record low. The equity was likely responding to rival First Solar's (FSLR) pending $285 million acquisition of NextLight Renewable Power LLC.
By the closing bell, SPWRA saw roughly 7,900 puts cross the tape, more than quadrupling its expected daily volume of fewer than 1,900 puts.
AFLAC Incorporated (AFL)
AFLAC Incorporated (AFL) announced its first-quarter earnings on Tuesday, announcing profits of $1.41 per share, surpassing consensus estimates for profits of $1.32. AFLAC Incorporated (AFL) also announced plans for a second-quarter cash dividend of 28 cents per share, payable to AFL shareholders as of May 19.
However, despite this upbeat report, shares of AFL have tumbled roughly 7% since Tuesday.
Option activity was brisk on AFL on Wednesday, with 53,000 contracts traded -- 13 times the stock's usual daily volume of fewer than 3,800 contracts. Puts were most popular, with roughly 36,000 of these bearish bets changing hands -- 18 times AFL's usual put volume of just 1,824.
Diana Shipping Inc. (DSX)
Diana Shipping Inc. (DSX) saw put contracts bought at more than 17 times the normal daily volume. By the closing bell on Thursday, the shipping issue had seen close to 7,300 puts bought, compared to its projected daily volume of fewer than 500 contracts.
Duke Energy Corporation (DUK)
Duke Energy Corporation (DUK) is scheduled to release first-quarter figures ahead of the open on Tuesday, May 4. DUK had 21 times the usual volume of option contracts executed on Wednesday, calls being in the majority.
Avis Budget Group Inc. (CAR) will report their first-quarter figures after the closing bell on Monday. According to Thomson Reuters, the firm has bested the Street's per-share profit predictions in each of the past four quarters.
It is interesting to note that there is such a pessimistic view towards CAR considering the fact that their shares are up more than 650% during the past 52 weeks, outpacing the S&P 500 Index (SPX) by an impressive 34.5% during the past 40 sessions.
However, according to the International Securities Exchange (ISE), there have been almost four put contracts to one call contract.
However, judging by the growing affinity for CAR puts, it appears the options crowd is rather wary ahead of the event.
McMoRan Exploration Co. (MMR)
McMoRan Exploration Co. (MMR) has been engulfed by put players, as investors react to a massive oil spill in the Gulf of Mexico. Friday saw about twice as many puts traded as calls, roughly 12 times its expected daily put volume.
Time Warner Inc. (TWX)
Time Warner Inc. (TWX) is to release its earnings report on Tuesday, 5thMay. According to Thomson Reuters, the media mogul has an impressive history in the earnings spotlight, exceeding analysts' per-share predictions in each of the last four quarters.
TWX midway through Friday had already seen close to 7,500 calls change hands – more than three times its predicted single-session volume of fewer than 2,000 calls, and about five times the number of TWX puts exchanged.
BP plc (BP)
The shares of BP plc (BP) dropped dramatically Thursday, due to the fallout from the company's massive oil spill in the Gulf of Mexico.
Options trading increased following this news as more than 281,700 contracts were executed during the day. This surge in volume was nearly 18 times the stock's average daily trading volume of 15,707 contracts, according to data from WhatsTrading.com. What's more, roughly 57% of the volume changed hands on the call side.
Motorola Inc. (MOT)
Handset maker Motorola Inc. (MOT) announced Thursday that it swung to a first-quarter profit of $69 million, or 3 cents per share, from a loss of $231 million, or 10 cents per share, in the year-ago period. Net sales fell 6.1% to $5 billion. The company also blew past analysts' expectations for a loss of a penny per share on sales of $5.1 billion.
After the report, options traders executed more than 92,000 contracts. This surge in volume was more than triple MOT's average daily trading volume of 25,521 contracts, according to data from WhatsTrading.com. In addition, 62% of the volume changed hands on the call side.
Watch Monday, for the “Market Outlook for the Week Beginning Monday, 3rd May 2010”
Take control of your future prosperity the Easy way. Become a member of Stock Options Made Easy today!
Back to Stock Options Made Easy from Options News April 30, 2010