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Option Clips: Juniper Networks, Hewlett-Packard Company, and Merck

Reviewing notable options activity on Juniper Networks, Inc., Hewlett-Packard Company, and Merck & Co., Inc.

by 1/13/2014 1:35 PM
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Three equities drawing attention from options traders today are tech names Juniper Networks, Inc. (NYSE:JNPR) and Hewlett-Packard Company (NYSE:HPQ), as well as pharmaceutical concern Merck & Co., Inc. (NYSE:MRK). Here's a look at how traders have been aligning their speculative bets today.

  • Juniper Networks, Inc. (NYSE:JNPR) ran to a two-year high of $25.96 earlier, before easing back to $25.44, after Elliott Management Corp. revealed a 6.2% stake in the company. The news was followed by a price-target hike to $30 from $25 at Janney Capital. In the options pits, though, JNPR's April 18 put is the most active strike, where 22,307 contracts have changed hands, mostly at the ask price. Implied volatility (IV) is higher, volume outstrips open interest, and data from the International Securities Exchange (ISE) confirms a portion of today's activity is of the buy-to-open sort. Given the deep out-of-the-money status of the puts, it could be that some of the volume here is at the hands of shareholders protecting against a potential pullback.

  • Also notching a notable milestone this morning was Hewlett-Packard Company (NYSE:HPQ), which hit a fresh 52-week peak of $28.79, after Atlantic Equities started the stock with an "overweight" rating. Not surprisingly, call volume has accelerated to more than two times what is typically expected at this point in the session. The February 25 call has seen the most action thus far, and more than three-quarters of the 2,673 contracts traded here have done so on the ask side. With HPQ hovering around $28.40, these calls are in the money (ITM); however, in order for the traders to profit, the stock must rise an additional 1.7% by the close on Friday, Feb. 21, to reach breakeven at $28.87 (strike plus the volume-weighted average price of $3.87).

  • Merck & Co., Inc. (NYSE:MRK) tagged the $53.10 mark today -- its loftiest perch in about six years -- amid headlines announcing the company's experimental anti-blood clot drug will most likely be approved by the U.S. Food and Drug Administration. The move higher has overall option volume running at more than nine times the typical intraday pace, and as such, MRK's 30-day, at-the-money IV is up 10.0% to 19.9%. The most popular position is the January 2014 50-strike call, and with the stock lingering near $52.77, it appears a number of these ITM contracts were sold to close.


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