Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) – A sizable bullish position initiated in Vertex options this morning looks for shares in the drug maker to regain some of the steep losses realized during the past two months. Shares in Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) are trading flat on the session at $39.10 as of 11:20 a.m. ET, but have dropped 35% since the second week in October. One options trader who appears to have purchased a 3,500-lot April $42/$55 call spread for a net premium of $2.66 per contract stands ready to profit from a strong rebound in Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) shares through expiration. The spread starts making money if shares increase 14% over the current price of $39.10 to surpass the effective breakeven point at $44.66, with maximum potential profits of $10.34 per contract available in the event shares jump 41% to hit $55.00 by expiration in April.
Quiksilver, Inc. (NYSE:ZQK) – Options on apparel and accessories retailer, Quiksilver, Inc. (NYSE:ZQK), are more active than usual on Friday ahead of the company’s fourth-quarter earnings report next week. Shares in the maker of casual wear under its Quiksilver, Roxy and DC brands are trading up 2% today at $4.09 as of midday on the East Coast. Traders exchanged more than 7,500 option contracts on Quiksilver, Inc. (NYSE:ZQK) during the first half of the session, sizable volume versus the stock’s average daily options volume of around 1,300 contracts. The Dec. $5.0 strike calls are seeing the heaviest trading traffic, with more than 4,200 lots in play against zero open positions. It looks like most of these calls were purchased for an average premium of $0.05 apiece, perhaps by one or more strategists expecting the price of the underlying to pop after earnings. The stock posted double-digit percentage gains following the release of third-quarter earnings in September and after the second-quarter earnings report in April of this year. Buyers of the $5.0 strike front month call options on Quiksilver, Inc. (NYSE:ZQK) this morning may profit at expiration should shares in the name rally nearly 25% to top the breakeven price of $5.05. The stock yesterday was rated new ‘neutral’ with a share price target of $4.00 at Goldman Sachs.
JPMorgan Chase & Co. (NYSE:JPM) – Weekly call buying on JPMorgan Chase & Co. (NYSE:JPM) in the first hour of the trading session suggests some traders anticipate shares in the name will extend gains in the near term. Shares in JPMorgan Chase & Co. (NYSE:JPM) are up better than 2% at present to trade at $42.35 as of 11:35 a.m. ET. The stock has increased roughly 30% during the past six months. Call options with five full trading sessions remaining to expiration were most active at the Dec. 14 ’12 $42.5 strike in the early going, with 2,800 contracts in play versus open interest of 94 positions. Time and sales data indicates the bulk of the $42.5 strike weekly calls were purchased for an average premium of $0.35 apiece. Call buyers may profit at expiration next week should shares in JPMorgan Chase & Co. (NYSE:JPM) rally another 1.2% to exceed the average breakeven price of $42.85. Shares in JPM last traded above $42.85 in the first full week of November.
Equity Options Analyst
The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
