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05:06AM (15 mins delay)
Oct 29, 2009 - 12:53 PM EDT
Alcoa, Inc. (AA) – Shares of aluminum producer, Alcoa, recovered significantly today, rising 8% to $12.90. Bullish investors hoping the stock continues to rebound purchased call options in the December contract. Approximately 5,200 calls were coveted at the December 13 strike for an average premium of 69 cents apiece. Shares of Alcoa must rally another 6% before investors breakeven at a price of $13.69. Call volume at the January 14 strike exceeded existing open interest nearly two-fold. Approximately 32,700 calls were exchanged at that strike versus existing open interest of just 18,094. It appears some traders purchased 18,690 calls for an average premium of 76 cents each. A large percentage of the call volume represents fresh activity. Although some portion of today’s volume at the December 14 strike could be the work of investors closing out existing positions.
Avon Products, Inc. (AVP) – The global manufacturer of beauty products suffered sharp share-price declines at the start of the session, but recovered by midday to stand just 2% lower at $32.39. Avon posted a 30% decline in profits for the third-quarter versus the prior year. Earnings came in at 36 cents per share, hurt by the stronger dollar, which reportedly lowered revenue by 11%. Bearish traders threw in the towel on AVP, salvaging whatever premium they could by selling out-of-the-money call options in the November contract. The November 35 strike had 2,300 calls shed for 10 pennies apiece while the lower November 34 strike had 1,600 calls sold for 20 cents each. Call sales suggest investors expect no miracles ahead of expiration next month.
Source: Seeking Alpha (Oct 29, 2009 - 12:53 PM EDT)
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