After last week’s shortened holiday week, the market is off to a strong start in the first part of Monday’s session. The SPX traded up over 20 points, with a P/C ratio of around 1.5.
We saw a large buyer of Endo Health Solutions (Nasdaq: ENDP, $79) calls. The Pennsylvania-based pharmaceutical company specializes in the research and development of medication for pain treatment and management. A trader purchased 7,247 ENDP March 85 Calls for $2.20, representing 9 times usual volume. With 25 days until expiration, ENDP stock would need to rally $7.50 (over 10%) for this trader to break-even at expiration. These call options potentially control 724,700 shares of ENDP, or nearly half the average daily float (average daily volume is around 1.7 million shares). These ENDP March 85 calls were trading $2.65-$2.70, meaning this trader was up over $325,000 on his $1.6 million dollar initial position. Endo Health is scheduled to report earnings on Friday (February 28) prior to the market open, so this trader likely expects a positive announcement. ENDP has traded in a $3.85 range this morning.
Another big order came across in SunPower Corporation (Nasdaq: SPWR), with the stock trading up $1.35 or about 4 percent to $35.12 in Monday’s session. SunPower Corporation designs and manufactures high-efficiency solar panels and cells, and can trace its roots to technology invented at Stanford University. We saw a buyer of 4,566 SPWR Mar 36 Calls for $1.50. With a 3-month average monthly volume of around 2.25 million shares, the calls potentially control 456,600 SPWR shares, or over 20 % of the float. For this trade to be profitable at expiration, SPWR must trade above $37.50 (requiring roughly a 7% move to the upside). Currently $1.57-$1.60, this trader is up about $30,000 on his $685,000 investment.