This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

American Home Options Attract Interest

Yes, there actually is something going on today in the market besides the Fed announcement.

Drug maker American Home Products (AHP - Get Report), often mentioned in takeover chatter, was seeing some interesting options activity.

Volatility Index
Today % Change
27.76 +2.17
Source: ILX

In quiet trading ahead of the Fed announcement, some investors were chasing after the American Home out-of-the-money call options. (A call option is a right but not an obligation to buy a stock.) The May 60 calls traded about 5,400 contracts on an open interest of 3,956, with the premium most recently listed at 45 cents. According to one floor trader at the Chicago Board Options Exchange, the bulk of the volume on those calls was the result of two fairly large institutional trades coming from two separate houses.

Nasdaq Volatility Index
Today % Change
65.13 -1.5%
Source: ILX

This is a somewhat speculative bet considering that the stock is trading at $58.70 with just three days until expiration. So the investor is betting on a quick move up in the stock. American Home has seen three merger attempts fail in recent years. But today there was no takeover talk to accompany the options activity, so the investors could be betting on some other news to fuel the stock.

The trader noted that he hasn't seen the stock at $60 in some time. Indeed, it last hit that level on March 12. If the stock doesn't move in the next three days, the option most likely won't be exercised, expiring worthless while the holder will be forced to eat the cost of the premium.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AHP $11.19 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs