King Pharmaceuticals, Inc. (KG) – Investors are hungry for call options this morning with shares of the pharmaceutical company engaged in the development and sale of prescription pharmaceutical and animal health products trading 3.30% higher at $8.75 as of 10:40 am (ET). Bullish options players expecting King Pharmaceuticals’ shares to continue to rally purchased at least 2,900 calls at the June $10 strike for an average premium of $0.19 per contract. Investors long the calls make money if shares of the underlying stock surge 16.45% to exceed the average breakeven price of $10.19 by June expiration. The jump in investor demand for option contracts on KG boosted the overall reading of options implied volatility on the stock a whopping 65.2% to 66.98% as of 10:42 am (ET). Options traders exchanged 8,597 contracts on the pharmaceuticals firm within the first 90 minutes of the trading day versus total existing open interest on the stock of 18,824 contracts.
Noble Corp. (NE) – Options investors established bullish positions on the provider of offshore contract drilling services this morning despite the 6.35% decline in the price of the underlying shares to $28.16. Noble’s shares fell sharply following President Barack Obama’s announcement on Thursday there is to be a six month moratorium on new offshore drilling. Contrarian players took advantage of richer put premium available today by selling short roughly 2,700 put options at the December $22.5 strike to take in an average premium of $1.475 per contract. Put sellers keep the full premium received as long as Noble’s shares exceed $22.50 through expiration day in December. Investors short the puts are apparently happy to have shares of the underlying stock put to them at an average price of $21.025 apiece should the put options land in-the-money at expiration. Shares must plummet 20% from the current price of $28.16 to dip beneath the $22.50 strike price, and must decline roughly 25.33% from the current price before put sellers face losses beneath the breakeven price of $21.025.
Allergan, Inc. (AGN) – Shares of the health care company engaged in developing and commercializing pharmaceuticals, biologics and medical devices increased 1.80% in morning trading to stand at $60.71 just ahead of 11:00 am (ET). Bullish investors positioning for additional share price appreciation by expiration next month picked up at least 1,200 calls at the June $65 strike for an average premium of $0.41 per contract. Call buyers are prepared to profit should Allergan’s shares jump 7.75% over the current value of $60.71 to surpass the average breakeven price of $65.41 by June expiration.