Options News
Tuesday, May 4th, 2010

There was a great deal of options trading on The Allstate Corp. (ALL) on Monday, as more than 42,300 contracts were executed. This was roughly double the normal daily volume. In addition, roughly 95% of the volume crossed the tape on the call side. Options players have been extremely optimistic when it comes to The Allstate Corp. (ALL).

The shares of ALL have edged nearly 10% higher since the beginning of the year.

POZEN Inc. (POZN)

On Monday, POZEN Inc. (POZN) and AstraZeneca PLC (AZN) received U.S. Food and Drug Administration approval for Vimovo, an arthritis drug that combines a generic painkiller with popular heartburn pill Nexium. The drug attempts to avoid the risk of stomach ulcers that can occur with commonly used pain drugs.

POZN will earn a $20 million milestone payment from AstraZeneca for the FDA approval, and is also eligible for up to $260 million in sales performance milestones, according to regulatory filings. It will receive a low double-digit royalty on annual U.S. sales, and royalties ranging from the mid-single digits to the high teens on sales outside the U.S.

Therefore, traders quickly reacted by buying 42,400 option contracts. This was an increase of six times the normal daily volume. Also, approximately 57% of the volume that changed hands was on the call side.

The shares of POZN have soared more than 73% since the start of 2010.

Time Warner (TWX)

Time Warner Inc. (TWX), on Monday, had more than 54,500 options contracts executed. This surge in volume was nearly 13 times the stock's average daily trading volume. Also, roughly 98% of the volume of the options that investors purchased, was call options.

Traders have jumped on the security's calls recently. The ISE has reported nearly six calls purchased to open for every one put purchased to open during the past two trading weeks. This ratio of calls to puts is higher than 97% of all those taken during the past 12 months.

Analysts have been kind to TWX by giving 14 "buy" ratings and eight "holds.

The shares of TWX have been in a solid uptrend, gaining more than 16% since the beginning of the year.

Fuel Systems Solutions, Inc. (FSYS)

Alternative energy issue Fuel Systems Solutions, Inc. (FSYS) is scheduled to take the earnings reins before the opening bell on Thursday, May 6, according to Thomson Reuters. The company has an impressive history in the earnings spotlight, outpacing the Street's per-share projections in each of the past four quarters. However, the latest trends suggest that the options traders are growing increasingly wary ahead of the firm's next earnings report.

During the past couple of weeks, option players on the International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE) have bought to open more FSYS puts than calls.

On Monday, FSYS had roughly 5,100 puts executed – almost doubling the number of FSYS calls traded, and more than quadrupling its expected daily put volume.

The shares of FSYS have been struggling lately in the market place, underperforming the broader S&P 500 Index (SPX) by 4.5% during the past month.

DryShips Inc. (DRYS)

DryShips Inc. (DRYS), on Monday, had roughly 25,000 option calls change hands in comparison to 5,000 put contracts. This runs contrary to the past pessimistic view where options in the past have been predominantly bearish.

DRYS has lost nearly 36% of its value during the past 52 weeks, and the stock has added just 4.5% in 2010. DRYS has underperformed the broader SPX by nearly six percentage points during the past month.

AnnTaylor Stores Corp. (ANN)

AnnTaylor Stores Corp. (ANN), a women's clothing retailer, is expected to announce that its first-quarter profit would "significantly exceed" its expectations and be "substantially better" than the year-earlier result. The company projected first-quarter sales of about $475 million, compared to its previous forecast of $445 million. Same-store sales are forecast to rise 11%, including a 15% increase at Ann Taylor and a 9% gain at the Loft chain. The security has gained more than 66% since the beginning of 2010.

Options traders are extremely optimistic about the company. The International Securities Exchange (ISE) has reported more than two calls purchased to open for every one put purchased to open during the past two weeks. This ratio of calls to puts is higher than 63% of all those taken during the past year.

Jackson Hewitt Tax Service Inc. (JTX)

Jackson Hewitt Tax Service Inc. (JTX), on Monday, said an amended credit agreement will allow it to fully fund planned operations through 2010, and improve results during next year's tax season. As a result of the news, which included plans to trim its workforce by 15%, the shares of the tax preparer climbed more than 25%, which caused investors to purchase call options, more than three times the put volume.

Back to Stock Options Made Easy from Options News May 4, 2010