EARN25

Bulls Eye Lear Corporation (LEA) Amid Calls for a Split

Lear Corporation (LEA) is facing pressure to divide in two

Digital Content Group
Feb 3, 2015 at 2:14 PM
facebook X logo linkedin


Lear Corporation (NYSE:LEA) is capturing the Street's attention today, after activist investor Mick McGuire wrote a letter urging the company to split its two main businesses into separate publicly traded entities. The shares are soaring on the news, up 5.6% to trade at $108.50, and fresh off a record high of $108.95. In the options pits, meanwhile, speculators are eyeing additional upside for the stock.

Diving right in, LEA calls are crossing at quadruple the average intraday rate, and the equity's 30-day at-the-money implied volatility has jumped 7.8% to 27.3% -- signaling elevated demand for short-term strikes. Most active is the now in-the-money March 105 call, which is seeing buy-to-open activity. In other words, these traders are banking on the shares to extend their lead north of $105 through the close on Friday, March 20, when the back-month options expire.

Today's call-buying bias is business as usual, as far as Lear Corporation (NYSE:LEA) is concerned. During the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 5,052 calls have been bought to open, versus just two puts. As a result, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.13 ranks just 2 percentage points from a 12-month low -- suggesting short-term traders have displayed an unusually pronounced preference toward calls, relative to puts.

 

You Don’t Need 25 Alerts -- You Need ONE You Can Trust!

That’s the idea behind Trade of the Week, Schaeffer’s newest trade alert.

Every Monday morning before the opening bell, you’ll receive a single, expertly researched trade recommendation -- built from the same proprietary research we’ve been using for over four decades.

It’s not just a signal.

It’s a plan designed for traders who are tired of jumping from alert to alert without ever finding their edge.

No juggling alerts. No switching directions mid-week. Just one clear, expertly researched trade idea -- delivered before the market even opens.

👉 JOIN RIGHT NOW FOR JUST $1 TO GET THE NEXT TRADE!