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Sony Corp. Calls And Puts In Play

Posted on the 23 February 2012 by Phil's Stock World @philstockworld

Today’s tickers: SNE, PLCE & EBAY

SNE - Sony Corp. ADR – The consumer electronics maker popped up on our ‘hot by options volume’ market scanner this morning after large positions were initiated in July expiry calls and puts. The strategist responsible for the trades appears to be positioning for shares in Sony Corp. to post double-digit gains in the next five months to expiration. The stock is up 1.35% at $21.17 on Thursday afternoon, one day after the Company’s new handheld game player and entertainment device, the Playstation Vita, went on sale in the U.S. It looks like the trader responsible for the bulk of total volume in Sony options today sold 5,000 puts at the July $16 strike for a premium of $0.35 each, and purchased around the same number of July $23 calls at an average premium of $0.93 apiece. The sizable positions were not marked as a spread, but the trades printed at approximately the same time this morning. The sale of the puts yields a net credit of $0.35 per contract, which the investor keeps as long as shares in Sony exceed $16.00 through expiration day. Long calls at the $23 strike prepare the investor to profit in the event that Sony’s shares rally 13.0% to surpass the effective breakeven price of $23.93 by expiration day in July. Finally, the purchase of around 1,300 calls at the July $22 strike suggests other bullish players are anticipating share price appreciation for the electronics maker. Traders paid an average premium of $1.40 per contract for the $22 strike calls and may profit in the event that shares settle above $23.40 at expiration.

PLCE - Children’s Place Retail Stores, Inc. – Traders driving volume in options on the specialty retailer of children’s apparel and accessories appear to be initiating bullish positions on Children’s Place Retail Stores ahead of the Company’s March 7 fourth-quarter earnings report. Shares in the retailer are up 2.4% to stand at $48.80 as of 12:30 p.m. in New York. One strategist betting shares in PLCE extend gains in the near term purchased a roughly 1,000-lot Mar. $50/$52.5 bull call spread at an average net premium of $0.78 per contract. The spread yields maximum potential profits of $1.72 per contract as long as the price of the underlying tops $52.50 at expiration next month. Longer-term bullish action took place in the June expiry calls, where one trader purchased around 2,500 calls for an average premium of $3.68 each. The call buyer stands ready to profit at expiration in the event that the retailer’s shares rally another 10.0% to surpass the average breakeven price of $53.68.

EBAY - eBay, Inc. – Shares in the operator of online marketplaces rose 4.3% to secure a fresh 52-week high of $36.15 today, and it looks like some traders are snapping up call options on the stock to position for the price of the underlying to continue to hit fresh highs in the next couple of months. Volume is heaviest in the front month, where investors appear to have purchased some 1,700 calls at the Mar. $37 strike for an average premium of $0.40 each. Bullish action spread to the higher Mar. $38 strike as one trader picked up a block of 2,000 calls at a premium of $0.19 per contract. The investor may profit at expiration next month in the event that eBay’s shares surge 5.6% over today’s high of $36.15 to surpass the effective breakeven price of $38.19. April $38 strike calls also attracted buyers, with around 3,300 contracts in play against open interest of 8,118 positions. Shares in eBay, Inc. last traded above $38.00 in 2007.

Caitlin Duffy
Equity Options Analyst

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Sony Corp. Calls And Puts In Play
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