Technology Select Sector SPDR (XLK) – Option traders devoured call options on the tech-sector exchange-traded fund in anticipation of further upside potential for the stock by expiration in December. Shares of the XLK are currently trading slightly higher by less than 0.5% this morning to stand at $20.77. Investors purchased approximately 42,000 calls at the December 22 strike by shelling out an average premium of 45 cents per contract. The heavy call volume at the December 22 strike evokes a sense of déjà vu given that a chunk of 35,000 calls were picked up at the same strike for about 43 cents each last week on September 11, 2009. Investors long the calls are hoping shares of the fund experience at least an 8% rally by expiration so they may breakeven at a price of $22.45. We note that shares of the XLK have traded beneath the breakeven point since September 2, 2008. XL Capital Ltd. (XL) – Investors coveted call options on XL Capital today amid a more than 3% climb in shares to $17.92. The most heavily trafficked strike is the now in-the-money September 17.5 strike where traders purchased approximately 10,000 calls for an average premium of 65 cents per contract. Investors may have targeted the September 17.5 strike because they aim to exercise their right to take delivery of the shares of the underlying stock ahead of expiration on Friday. Another possible tactic, in lieu of exercise, may result in profits to traders if they can sell the calls for more than the 65 cents paid to take ownership today.Complete Story »
