Illumina, Inc. (NASDAQ:ILMN) – Shares in biotechnology company, Illumina, Inc. (NASDAQ:ILMN), jumped 9.25% this morning to a new 52-week high of $57.00 on unconfirmed reports that Swiss drug maker, Roche Holding AG, may be in talks to purchase Illumina at a substantially sweetened price of $66.00 a share or $8.1 billion. San Diego, California-based Illumina’s shares have rallied more than 80% since the start of the year on speculation the provider of DNA sequencing technology may be acquired. Options volume on Illumina, Inc. (NASDAQ:ILMN) is up sharply on the session, with some 14,000 contracts in play on the stock as of midday in New York, versus average daily options volume of around 2,200 lots. A number of strategists appear to be buying upside calls on the takeover chatter, snapping up in- and out-of-the-money calls in the December and January expiries. The Dec. $55 and $57.5 strike calls, which have one full trading session remaining to expiration, attracted buyers in the early going. Trading traffic in call options expiring the third Friday of the New Year are looking for shares in the name to rise sharply during the next four weeks. Options players appear to have purchased approximately 1,000 calls at the Jan. 2013 $62.5 strike calls for an average premium of $0.96 apiece. Buyers of these contracts profit at expiration next month should shares in Illumina, Inc. (NASDAQ:ILMN) rally another 11% to top the average breakeven price of $63.46. Traders also picked up around 600 of the Jan. 2013 $65 strike calls at an average premium of $0.45 each, and may profit in the event of a 15% move to the upside to exceed $65.45 by expiration.
Williams-Sonoma, Inc. (NYSE:WSM) – Put options on the retailer of high-quality home goods are changing hands this morning, with shares in the name trading slightly lower on the session, down 0.20% at $44.54 as of 12:15 p.m. ET. Put buyers taking to Williams-Sonoma, Inc. (NYSE:WSM) in the early going appear to be positioning for shares in the name to pullback somewhat during the next four weeks. Traders appear to have purchased 1,000 in-the-money puts at the Jan. 2013 $45 strike for an average premium of $1.60 apiece. The bearish position starts making money if shares in the retailer slip 2.6% from the current level to breach the effective breakeven point on the downside at $43.40 by January expiration. The stock has rallied more than 30% since mid-January, although trades roughly 7% below the November 2nd 52-week high of $48.07 as of the time of this writing.
Equity Options Analyst
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