Friday Option Rap: TGT, CME, DG, CSCO and SLW

Posted Jul 6th 2007 6:10PM by Kevin Kersten
Filed under: Major Movement, Cisco Systems (CSCO), Target Corp. (TGT), Chicago Merc Exch Hld'A' (CME), Dollar General (DG), Options, Silver Wheaton (SLW)

The markets made mild gains closing out the holiday week on lighter volume. The Dow gained 203 points this week to close at 13611.68 a 1.5% gain for the week.

Target Corporation (NYSE: TGT) moved higher $3.89 (6%) to $68.10 with active options trading on rumors it may shed its credit card business. Silver Wheaton (NYSE: SLW) rose $0.68 (5%) to $13.17 on higher silver prices. Chicago Mercantile Exchange (NYSE: CME) rose $19.11 (3%) to $574.80 after sweetening the CBOT takeover offer.

The NYSE had volume of 2.3 billion shares with 1,971 shares advancing while 1,285 declined for a gain of 49.15 points to close at 1,0075.39. On the NASDAQ, 1.6 billion shares traded, 1,740 advanced and 1,259 declined for a gain of 9.86 to 2,666.51.

Target (NYSE: TGT) saw heavy volume on the July 67.50 calls (TGTGU) with over 20,000 options trading. On the different July strikes there were about 44,000 calls traded while the puts traded only 28,000 contracts. There was an even bigger difference in August where about 20,000 contracts traded on the calls compared to about 4,000 contracts of puts. For all the different strikes on Target there was 30,000 more calls than puts traded for a put/call ratio of 0.62. The purchase of all the calls on target is a bullish sign as investors are betting the stock is going to go up soon. The stock saw 29.8 million shares trade today over 3 times its three months moving average.

Other stocks that had heavy volume include Dollar General (NYSE: DG) which saw heavy volume on the January 15 calls (DGAC) with over 50,200 options trading. Cisco Systems (NASDAQ: CSCO) moved 21,000 contracts on the July 27.50 calls (CYQGY). In options there were 3.3 million puts and 4.4 million calls traded for a put/call open interest ratio of 0.75.

Kevin Kersten is an Options Analyst with InvestorsObserver.com. Do you have any deadwood in your portfolio? Check out the 18 Warning Signs That Tell You To Dump A Stock.

Disclosure note: Mr. Kersten owns and or controls a diversified portfolio of long and short positions that may include holdings in companies he writes about.