Estee Lauder Companies Inc (NYSE:EL) – Options changing hands on Estee Lauder today look for shares in the maker of skincare products, makeup and fragrances to post attractive gains in the near term. Shares in the provider of high quality products sold under brand names that include Bobbi Brown, La Mer, and Clinique, are up slightly today, trading 0.25% higher on the session at $65.04 as of 11:55 a.m. ET. The stock has rallied approximately 8% since the start of 2013. Overall options volume on Estee Lauder is running at roughly three times the stock’s average daily volume as of midday in New York, with upwards of 3,200 contracts traded. Most of the action is in the May $65 strike call, where around 2,400 calls changed hands versus open interest of 805 contracts. It looks like most of the $65 calls were purchased this morning for an average premium of $2.35 apiece. The bullish strategy pays off at expiration if shares in EL rally another 3.5% over the current price of $65.04 to surpass the breakeven point at $67.35. Call buyers may be looking to benefit from a pop in Estee Lauder’s shares following the company’s third-quarter earnings report on May 2nd.
RF Micro Devices, Inc. (NASDAQ:RFMD) – Bearish activity in RF Micro Devices options this morning suggests one trader is bracing for shares in the name to potentially decline substantially during the next six weeks. The stock has moved higher in recent months, up more than 10% year to date. Shares today are down 0.60% at $5.10 as of 12:10 p.m. ET. May expiry put buying on RFMD may be looking for the stock to pullback following the company’s fourth-quarter earnings report later this month. Upwards of 6,600 puts were purchased at the May $5.0 strike at a premium of $0.35 each during the first hour of the trading session. The bearish stance on RF Micro Devices makes money at expiration if shares in the semiconductor components maker drop 9% from the current level to settle below the breakeven price of $4.65.
Avago Technologies Ltd (NASDAQ:AVGO) – Put options changing hands on semiconductor devices maker, Avago Technologies, in the early going this morning look for the price of the underlying to pull back to the lowest level in several weeks. Shares in AVGO are up 0.15% on the day at $34.37 as of 12:40 p.m. ET. Overall options volume on Avago jumped to more than 8 times the stock’s average daily volume and the put/call ratio on the stock surged to more than 160 after one or more traders snapped up May expiry puts this morning. The May $32.5 strike put traded more than 4,200 times during the first half of the session against open interest of just 43 contracts, with the bulk of the volume purchased at an average premium of $0.70 each. The bearish contracts make money if shares in Avago Technologies decline 7.5% from the current price of $34.37 to breach the average breakeven point on the downside at $31.80 by May expiration. The $32.5 strike put options expire the week prior to Avago’s second-quarter earnings report seven weeks from now.
Caitlin Duffy
Equity Options Analyst
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