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Bearish Options Action in Tyco (TYC)

Posted Feb 22nd 2010 2:00PM by Beth Gaston Moon (RSS feed)
Filed under: Options

Within the first hour of the trading day, option traders were piling into Tyco International (TYC) calls, selling roughly 4,000 of the April 37 calls for 65 cents. These options are out-of-the-money by slightly more than a dollar and are easily the most-active option trading across Tyco today.

Given that open interest at this strike was just 2,283 heading into today's trading, it is plausible that today's volume traded to open. The price action suggests these calls were sold to open, which is a bearish to neutral strategy. The investor in question may already own TYC shares and could be selling these upside calls as a hedge against modest downside during the next two months.

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Alcoa Options: Potential Covered Calls

Posted Jan 19th 2010 10:40AM by Beth Gaston Moon (RSS feed)
Filed under: Alcoa Inc (AA), Options

A few days after Alcoa (AA) surprised to the downside with its fourth-quarter earnings report, option traders looked a bit longer term, selling upside calls in the July series, possibly as part of a covered-call strategy.

The July 20-strike call, which is out-of-the-money by more than $4, or about 28%, saw more than 20,000 contracts trade on Friday, versus open interest of just 2,512. This morning, open interest expanded to more than 22,000, meaning that nearly all of Friday's volume traded to open.

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Options action ahead of Research in Motion (RIMM) earnings

Posted Sep 23rd 2009 1:00PM by Beth Gaston Moon (RSS feed)
Filed under: Earnings Reports, Research in Motion (RIMM), Options

Research in Motion Ltd. (NASDAQ: RIMM), the tech company most well-known for building the BlackBerry, is set to report quarterly earnings tomorrow after the close. Analysts expect RIMM to bank $1.00 per share in the period, 13 cents better than year-ago results.

In the past two reporting periods, RIMM has managed to surprise to the upside.

During the past few weeks as earnings approach, RIMM has seen action among call buyers, who are effectively driving up implied volatility. In the past month, at-the-money implied (or expected) readings have jumped from 41% to about 59%. The implied levels are looking fairly pricey here, especially when compared to historical readings.

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