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LinkedIn Corp (NYSE:LNKD) shares are down to $223.00 today, prompting an influx of option traders. Call volume is running at nearly four times its typical intraday pace, while puts are trading at roughly three times their normal clip. Attracting notable attention are several weekly options -- in fact, the session's seven most active options all expire this Friday. Leading the way is LNKD's weekly 10/11 235-strike call, where more than 3,100 contracts have crossed the tape, on open interest of 329 contracts. The majority of these transactions have gone off at the bid price, suggesting these speculators sold the calls to open. They will secure a profit as long as the shares are trading below the strike price at the closing bell on Oct. 11, but risk assignment if LNKD rallies above it -- in which case, the call sellers may be forced to deliver the shares at the strike price, regardless of LNKD's market price at the time.
Similar neutral-to-bearish bets were made on LNKD's weekly 10/11 230-strike call, as well. Over 2,900 contracts traded at this strike, compared to open interest of fewer than 100 -- again, largely at the bid price. These call writers have less wiggle room than the ones mentioned above, as they need the stock to stagnate below $230, rather than $235, to avoid potential assignment. However, by assuming a higher degree of risk, they also received a higher premium for selling the calls. At last check, delta on this option was 0.18, or 18%, signifying a less than 1-in-5 chance of it moving in the money prior to Friday's close.
Finally, from a more traditional call buying perspective, LinkedIn's weekly 10/11 225-strike call is worth noting. Over half of the 1,800-plus contracts traded at this strike did so at the ask price, and volume outstrips open interest, confirming the creation of some long call positions. Unlike the call sellers surveyed above, these call buyers want LNKD to rally -- specifically, beyond $225. If the shares fail to muster such a move, the most these traders can lose is the initial premium paid.
From a volatility perspective, it appears that selling LNKD options may be a smart play right now. Today, the stock's 30-day, at-the-money implied volatility is up 11.8 percentage points, or 23.7%, to 61.4%. For the sake of comparison, the same measure registered at just 33.8% on Sept. 24, meaning that premiums are getting more expensive, relatively speaking.
Technically, however, the stock has been performing quite well for call buyers lately. After all, LinkedIn Corp (NYSE:LNKD) has almost doubled year-to-date, and outperformed the broader S&P 500 Index (SPX) by nearly 20 percentage points during the past three months.
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