YM BioSciences Inc. (NYSEAMEX:YMI) – Shares in the drug development company are up nearly 80% today at $2.89 after Gilead Sciences, Inc. agreed to purchase the Canadian biotechnology company in an all-cash deal valued at $510 million or $2.95 a share. Traders who purchased upside calls on YM BioSciences Inc. (NYSEAMEX:YMI) ahead of the deal saw the value of their contracts rise sharply along with the price of the underlying shares this morning. YM BioSciences Inc. (NYSEAMEX:YMI) call selling in the early going may be the work of traders taking substantial profits off the table. Time and sales data for transactions in the Dec. $2.5 strike calls back in November suggests traders purchased most of the 2,043 open contracts for an average premium of $0.05 apiece last month. The sale of at least 1,600 now in-the-money Dec. $2.5 strike calls this morning for an average premium of $0.40 each may mean traders are banking hefty gains that amount to eight times the original investment. Open interest in YM BioSciences Inc. (NYSEAMEX:YMI) options is largest in the Jan. 2013 $2.5 strike call, with a total of 3,894 open contracts. Traders on Monday and Tuesday of this week appear to have purchased most of the calls for an average premium of $0.13 each. Trading traffic in the $2.5 strike call this morning reveals much of the volume this morning was sold at a premium of $0.40 per contract.
Wal-Mart Stores, Inc. (NYSE:WMT) – Upside call options on Wal-Mart Stores, Inc. (NYSE:WMT) are active today though shares in the world’s largest retailer are trading down for a second consecutive session, currently off 2.3% on the day at $69.23 as of 1:15 p.m. in New York. Bulls anticipating a rebound by the end of this week purchased around 2,500 calls at the Dec. 14 ’12 $70 strike for an average premium of $0.22 apiece, thus positioning to profit should shares rally above $70.22 by expiration. Like-minded strategists snapped up 4,400 calls at the Dec. 21 ’12 $70 strike at an average premium of $0.47 each, and purchased around 1,700 of the $72.5 strike calls expiring next week for an average premium of $0.05 a-pop. Traders long the $72.5 strike calls stand ready to profit should shares in Wal-Mart Stores, Inc. (NYSE:WMT) increase at least 4.8% to exceed the $72.55 breakeven price by expiration. Meanwhile, the heaviest trading traffic in Wal-Mart Stores, Inc. (NYSE:WMT) calls is in the Jan. 2013 $75 strike contracts. It looks like volume in excess of 40,000 call options traded at the $75 strike this morning for an average premium of $0.085 per contract. The sizable prints may represent closing purchases of calls sold back in July.
Equity Options Analyst
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