Today’s tickers: SJM, MS & NILE
SJM - J.M. Smucker Co. – Shares in the maker of branded food products fell as much as 9.8% to $70.50 today after third-quarter earnings missed expectations and the Company cut its full-year earnings estimate. The sharp correction in the shares may be temporary, by the looks of trades placed in J.M. Smucker Co. options straight out of the gate this morning. Investors snapped up calls across several expiries, perhaps taking advantage of deeply discounted premiums on the contracts in the view that shares may rebound. March expiry call buyers targeted the $75 strike, buying around 280 lots for an average premium of $0.60 each. Traders long the calls may profit at expiration next month if shares in the peanut butter producer rally 6.5% over the current traded price of $71.00 to exceed the effective breakeven point at $75.60. Same-strike price calls in the April contract were purchased 200 times at an average premium of $1.10 apiece, positioning buyers to profit above a breakeven share price of $76.10. Meanwhile, third-quarter results and the revision to full-year guidance seem to have sparked concern in other strategists buying SJM puts. Traders positioning for shares to extend losses purchased around 150 of the Mar. $65 strike puts at a premium of $0.41 each, and picked up around 220 July $70 strike put options at an average premium of $3.50 per contract.
MS - Morgan Stanley – It looks like some Morgan Stanley options players paid heftier premiums than necessary for downside puts this morning. Reports that Moody’s may cut its rating on MS by up to three notches sent shares in the financial services firm down as much as 4.0% to $18.20, sparking demand for downside protection. The shaky start to the trading day was…
