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RIMM Hung Up, Dollar Thrifty Gassed Up

Quiet day in options as Sysco, Valeant pop on solid earnings


Your daily options trading wrap up.


Slow day of trading with some investors focused on action in commodities. Crude oil has bubbled back to recapture more than $5 per barrel and trades at $102.25 a jug. Silver gained $2.36 to $37.65 and gold is up $18.40 to $1,510. However, stocks closed broadly lower across Europe after Standard & Poor’s lowered Greece’s credit rating. The euro, which plummeted from 1.4825 to 1.4315 Thursday and Friday of last week, is steady at 1.4340. Heading into the final hour, the Dow Jones Industrial Average is holding a 60-point gain with leadership from Exxon (NYSE: XOM), Dupont (NYSE: DD), and Alcoa (NYSE: AA). The NASDAQ gained 17.6. The CBOE Volatility Index (CBOE: VIX) lost 1.21 to 17.19. Options volume is very light, with 5.5 million calls and 4.5 million puts traded so far.

Bullish Flow

Sysco Corp. (NYSE: SYY) adds $3.36 to $31.87 after the company reported a 44-cent per share quarterly profit, which topped Street views by 3 cents. The stock is hitting new 52-week highs on the news. Meanwhile, options volume includes 10,000 calls and 1,675 puts. SYY May 29 Calls are the most active with 2,065 traded; probably seeing some liquidating trades. The contract is now almost 10% in-the-money and 98% of the volume is on the bid. May 30, 31, and 32 calls are busy as well, with the majority trading at the Ask, indicating buying interest.

Valeant Pharmaceuticals (NYSE: VRX) is up $2.58 to $52.58 Monday morning after posting a 56-cent per share quarterly profit, which beat Street estimates by a nickel. VRX May 55 Calls, now 4.6% out-of-the-money with a delta of .31, are seeing early interest with 4,140 traded. Looks like some investor paying 95 cents per contract and might be closing. Open interest is 19,540 and currently the largest position in VRX.

Find more option analysis and trading ideas at Options Trading Strategies.

Bearish Flow

Research In Motion (NASDAQ: RIMM) is down $1.06 to $44.93 and falling to fresh six-month lows. Shares tumbled 14% on April 29 after the Blackberry-maker lowered its forecast and is down an additional 7.6% since that time. In options action, one investor paid 78 cents for the RIMM June 40 Puts — June 57.5 Calls Bearish Risk Reversal, 5000 times. The trade was tied to a block of shares at $44.90 (delta = .29). The bearish trade was repeated more than once and the June 40 puts and June 57.5 calls are the two most active RIMM options today, with 13,880 and 10,810 traded, respectively. Separately, an investor apparently initiated a Jun 40 — 50 bearish risk reversal at 4 cents, 2000 times on the International Securities Exchange. The trade looks tied to 120,000 shares at $44.84. Thirdly, the RIMM Jan 35 — 37.5 — 40 Put Butterfly Spread is seeing interest. It traded at 22 cents, 682 times, 796 times and 682 times on the ISE. Overall, the flow in RIMM remains bearish and seems to reflect underlying concerns that the company’s upcoming Blackberry and tablet software is not keeping pace with competitive products from Apple and Google.

Implied Volatility Mover

Trading is brisk in Dollar Thrifty Automotive (NYSE: DTG) after Hertz (NYSE: HTZ) made a renewed bid for the auto rental company. Hertz is offering $57.60 in cash plus .8546 HTZ shares. At current levels, the deal equates to $72.16 and a 24% premium to a hypothetical offer announced by Avis Budget (NASDAQ: CAR). DTG is trading up $9.12 to $78.81 and well above the Hertz bid. Meanwhile, the top options trade is a DTG Jun 80 — 85 Call Spread, apparently bought at $1.30, 2000 times on the AMEX. A DTG May — Jul 75 Call Spread was bought at $1.70, 1500 times. The May and July 75 calls are the most actives. July 60 and 70 calls are seeing interest as well. Implied volatility is down 14% to 20, but the fact that the stock is trading above the latest offer and that out-of the-money calls are seeing interest today, there seems to be some expectations that the bidding for DTG will go even higher.

Option Flow

Bearish activity detected in Fairchild Semiconductor (NYSE: FCS), with 2015 puts trading, or four times its recent average daily put volume.

Bearish activity detected in Green Mountain Coffee Roasters (NASDAQ: GMCR), with 16,496 puts trading, or three times its recent average daily put volume.

Bearish activity detected in H&R Block (NYSE: HRB), with 19,225 puts trading, or five times its recent average daily put volume.

Increasing volume is also being seen in Micron Technology (NASDAQ: MU), Visa (NYSE: V), and Applied Materials (NASDAQ: AMAT).

Frederic Ruffy is the Senior Options Strategist at, a site dedicated to helping traders make sense of the complex and fragmented nature of listed options trading.

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