STOCKS NEWS US-Options volume on Apple surge after MSFT-HTC deal

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1250 ET 28April2010-Apple shares down on MSFT
HTC deal; options volume surge

Apple Inc shares fell 0.6 percent to $260.36 after Microsoft reached a deal with Taiwan's HTC, the world's No.5 smartphone brand, over royalties on certain HTC phones running Google's Android operating system. In March, Apple sued the Taiwanese company, accusing it of infringing 20 hardware and software patents related to the iPhone. By midday, 126,000 options already traded in the name, around 3 times the normal volume, said WhatsTrading.com option strategist Frederic Ruffy. Most of the action has been in smaller lots, with the exception of a May 260 - 290 call spread, apparently bought at $6.30, he said.

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1240 ET 28April2010-Stocks with heavy buying could roll over
Jefferies

'We looked at stocks that have recently outperformed and have had heavy additions in institutional ownership. We found that those with the largest additions in institutional ownership also saw some of the largest declines yesterday,' wrote Jefferies & Co's equity derivatives unit.

'We believe that the high velocity with which positions were added in these names could lead to a rapid decline in those names should the market turn lower.'

Jefferies said the top names showing this relationship include American International Group, Citigroup, Ford, Marshall & Ilsley Corp, DirecTV, Stanley Black & Decker, Berkshire class B , Boeing, Rowan Co, Goodyear Tire and Rubber Co, Dr Pepper Snapple Group and Office Depot.

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1227 ET 28April2010
VeriSign gets strangle plays before results

Internet security and naming services provider VeriSign Inc fell 1.44 percent to $26.72 heading into its earnings this afternoon. In the options market, a block of 9,428 June $25 puts traded at the 55-cent asking price on the International Securities Exchange, said WhatsTrading.com option strategist Frederic Ruffy. He noted the strike's open interest is 21,000 lots and the trade might close one leg of June $25-$27 strangles, which were sold to open on March 15 (5,700 times at 70 cents) and March 5 (6,750 times at 90 and 95 cents). Open interest in the June $27 calls is 21,500. 'This strategist might be holding the position through earnings, looking for VeriSign to stay below the $27 strike,' he said. Implied volatility rose about 6 percent to 33 percent.

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1152 ET 28April2010
GE CEO sees return to 'good, solid' profit growth

General Electric Co expects to experience 'good, solid' profit growth through the rest of this year, carrying into 2011 and 2012, Chief Executive Jeff Immelt told shareholders on Wednesday.

The largest U.S. conglomerate had recorded nine consecutive quarters of profit declines during the downturn.

Immelt also said he believes it will take renewed investment by businesses, more than just consumer spending, to drive the U.S. economy out of its worst downturn since the Great Depression.

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Shares of GE, a Dow component, rose 0.6 percent to $18.82.

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1127 ET 28April2010 Options traders book profits on Marriott International

Options traders holding bullish positions on Marriott International took profits off the table in the first hour of the trading session, in anticipation of continued bearish movement in the price of the underlying shares, said Caitlin Duffy, options strategist at Interactive Brokers Group. The stock fell 1.1 percent to $35.67, adding to the stock's total price decline of 6.33 percent since Monday's session. One options investor unraveled a decent-sized options combination play in the July contract in order to bank available profits, Duffy said. 'It looks like the trader originally purchased 5,790 calls at the July $40 strike for a premium of 25 cents apiece, and sold the same number of puts at the lower July $28 strike for 25 cents each,' she said. The transaction was initiated at zero cost to the investor back on April
15 when shares of the underlying stock were trading at a volume
weighted average price of $34.13. Today, the trader took off the trade by selling the calls for a richer premium of $0.50 each, and buying the puts for $0.20 apiece. Net profits pocketed on the trade amount to $0.30 per contract for total gains of $173,700, Duffy said.

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1114 ET 28April2010 Goldman:Buy HP options to lock
in gains, accentuate upside

Goldman Sachs option strategists recommend Hewlett-Packard Co shareholders buy May $52.50 straddles to gain volatility exposure through several catalysts, including HP's earnings on May 18. 'May straddles cost less today than we expect them to cost on the day before earnings,' they said in a note. 'We see little likelihood of decay over the next three weeks and straddle buyers gain exposure to several interim catalysts, including the Intel's analyst day (7-May).' Analyst David Bailey sees the potential for higher than normal volatility over the next few weeks for HP. Options appear inexpensive: May straddles cost only 5.2 percent. While realized volatility has been low, Goldman sees the potential for shares to move more than 5.2 percent over the next three weeks. Such a low straddle price with several weeks until results in a very low implied earnings day move of plus/minus 3 percent relative to a median earnings day move of 4.4 percent.

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