Oil discovery drives demand for Harvest Natural Resource call options

HNR? Harvest Natural Resources, Inc. ? News Harvest Natural Resourcesdiscovered oil off the coast of Gabon sent shares in the Houston, TX-basedcompany up as much as 29.0% to an intraday high of $13.56. The sharp rally inthe price of the underlying on the reports spurred bullish plays inHarvest?s options this morning. Shares are currently up a lesser 12.65%at $11.83 as of 12:25pm on the East Coast. Options players purchased roughly1,600 calls at the June $12.5 strike for an average premium of $0.54 each. Thecall options were in-the-money earlier in the session, but are now tradingout-of-the-money as the rally has cooled somewhat. Investors long the calls arepoised to profit should shares in HNR increase 10.2% over the current price of$11.83 to surpass the average breakeven point to the upside at $13.04 byexpiration on Friday. Like-minded bulls seeking a longer-term run-up in theprice of the shares picked up roughly 1,000 calls at the September $12.5 strikefor an average premium of $2.09 a-pop. Call buyers at this strike make money ifshares in Harvest Natural Resources surge 23.3% to trade above the averagebreakeven price of $14.59 by September expiration. Options implied volatilityon Harvest stands 9.8% higher on the session at 82.44% just after 12:30pm inNew York.

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ESI? ITT Educational Services, Inc. ? Shares in the for-profit provider ofdegree programs in the U.S. rallied nearly 2.0% this morning to touch anintraday high of $83.74 after analysts at Piper Jaffray raised their shareprice target on the stock to $84.00 from $75.00. Despite the rise in shares ofITT Educational Services today one options strategist is positioning for theprice of the underlying to drop sharply ahead of June expiration. The near-termbearish player initiated a debit put spread, buying some 2,750 puts at the June$77.5 strike for a premium of $0.59 each, and selling the same number of putsat a premium of $0.09 apiece. Net premium paid to initiate the put spreadamounts to $0.50 per contract. The investor profits if shares in ITTEducational Services fall 8.05% from an earlier high of $83.74 to breach theeffective breakeven price of $77.00 at expiration. Maximum potential profits of$4.50 per contract are available to the put spreader should shares in ESIplunge 13.4% to trade below $72.50 at expiration at the end of the week. Therise in demand for put options on the stock helped lift the overall reading ofoptions implied volatility on ESI 3.6% to 49.04% as of 11:30am in New York.

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XHB? SPDR S&P Homebuilders ETF ? A large transaction in July contractcall options on the Homebuilders ETF suggests one strategist is preparing for arebound in the price of the underlying fund through expiration next month.Shares in the XHB, an exchange-traded fund that replicates the performance ofthe S&P Homebuilders Select Industry Index, increased as much as 0.90%during the first half of the session to secure an intraday high of $17.23. Thefund?s holdings include companies such as Bed Bath & Beyond, Inc.,Tempur-Pedic International, Inc., and Toll Brothers, Inc. An investorpositioning for shares in the XHB to continue to move higher purchased 10,000in-the-money calls at the July $17 strike for a premium of $0.59 apiece. Thetrader makes money if shares in the fund rally another 2.1% over today?shigh of $17.23 to exceed the effective breakeven price of $17.59 by expirationday in July. Shares in the fund tumbled 10.4% in the past couple of weeks,having traded up at $18.91 on May 31, down to a 6-month low of $16.95 this pastFriday.

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FII? Federated Investors, Inc. ? The provider of investment management and financialservices popped up on our ?hot by options volume? market scannerthis morning due to heavier than usual trading traffic in long-dated putoptions. Shares in Federated Investors are slightly lower in early-afternoontrade, standing 0.20% lower on the day at $24.10 as of 12:40pm in New York. Itlooks like some 4,200 puts changed hands at the January 2012 $20 strike againstpaltry previously existing open interest of just 16 contracts. The majority ofthe puts appear to have been purchased at a premium of $1.10 apiece. Theinvestor or investors driving the volume are positioned to profit should sharesin FII plunge 21.6% from the current price of $24.10 to breach the breakevenpoint on the downside at $18.90 by expiration day in January. Shares inFederated Investors, Inc. last traded beneath $18.90 back in March 2009.Second-quarter results from the company are scheduled for release after thefinal bell on July 21, 2011.?

Source: http://www.fxstreet.com/fundamental/analysis-reports/daily-options-intelligence-report/2011-06-13.html

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