Today’s tickers: PAY, GLD, WFC, SMH, CMCSK, SUN, KO & MON
PAY - The designer of systems that enable secure electronic payments edged onto our ‘most active by options volume’ market scanner this afternoon after a large bullish stance was taken in the January 2010 contract. Shares of the firm have increased nearly 1% today to stand at $14.13. The options action observed indicates that one investor expects significant appreciation in shares by next year. But, the trader apparently does not see the stock rising much higher than the current 52-week high of 19.91, attained nearly one year ago on September 12, 2008. The bullish trader was seen partially financing the purchase of a long call spread by selling 12,000 out-of-the-money puts at the January 10 strike for 55 cents each. He then bought 12,000 calls at the January 12.5 strike for 3.10 per contract, spread against the sale of the same number of calls at the higher January 20 strike for 42 cents premium apiece. The net cost of the spread was reduced to 2.13. Thus, the trader stands to accumulate maximum potential profits of 5.37 should the stock surges to $20.00 by expiration in January. Shares would need to rally a whopping 42% from the current price for the trader to pocket the maximum available profits of approximately $6,444,000. We note that the 36,000 lot trade put on today exceeds the previous existing open interest on the stock of 29,251. – Verifone Holdings, Inc. –
GLD - Option traders established ratio put spreads on the gold exchange-traded fund today amid a 1% rally in shares to $97.86. Gold is actually a couple of dollars lower today as the dollar regains its feet and investors critically assess the rationale for gold’s recent ascent. Today’s put spreads represent downside protection for investors hoping to lock in gains assumed to have been made during the recent rally in the price of gold. Using the November contract 2,500 puts were picked up at the November 97 strike for 4.20 apiece, and spread against the sale of 5,000 puts at the lower November 93 strike for 2.25 each. The investor pockets a net credit of 30 cents on the trade, which he will retain in full if shares of the GLD remain higher than $97.00 by expiration. Beneath a price of $97.00 for GLD, the investor faces rising profits should shares fall to $93.00 at which…
