Unusual Options Activity (APR 14, 2007)

Stock Tickers: EDS, ESRX, SLM, WFT, HAL, IPS, YHOO, MER, MEDI, MEDX, DNDN, AAPL

Friday saw some strange options activity, but perhaps not as strange as in previous weeks. 

EDS (EDS) saw 11,675 contracts of the JUN07 $30 PUTS, which is highly unusual activity since its open interest was a mere 165 contracts.

Express Scripts (ESRX) saw 1,761 contracts of its JAN08 $85.00 CALLS.  Is someone hoping for a big action between now and then? With the mergers in the sector, anything is possible.

SLM, Sallie Mae, (SLM) traded 32,884 of the APR07 $45.00 PUTS.  There were also 8,314 contracts in the JUL07 $45.00 CALLS.  With the SLM buyout interest out there anything is possible.  SLM also has some fairly significant open interest in its call options of various months and various strike prices.

Weatherford (WFT) saw 3804 contracts of the MAY07 $55.00 CALLS.  That is no shock, considering there are rumors that Halliburton may try to buy the company.  It also saw its APR07 $50 CALLS trade 14,303 contracts, which means that this trading is betting on a deal happening before next Friday.

IPSCO (IPS) saw 2,646 contracts in the JUN07 $125 PUTS and the open interest was only 298 contracts.  Maybe someone doesn’t believe its "merger talks" are really going to materialize.

Yahoo! (YHOO) saw more than 50,000 contracts trade in each of its JUL07 $20 and $25 CALLS trade, so this must some options play on a way of owning the stock for less risk with way in the money calls going into earnings.

Merrill Lynch (MER) saw 34,223 of its APR07 $95 PUTS, but those are pretty well into the money.

MedImmune (MEDI) also saw more activity now that it has all but advertised a selling out price.

Medarex (MEDX) still has some enormous open interest in all of its surrounding strike prices out to JAN08, and this is one we sent out the options alert about because it looked like traders were trying to look for a volatility trade (playing PUTS & CALLS) like in Dendreon (DNDN).

Dendreon (DNDN) is one that actually still has a large open interest for this month because of the pop and its May open interest is huge May options as the contracts expire 3-days after the FDA "due date" of the approval verdict from FDA on Provenge.

Apple (AAPL) would be odd if it wasn’t any other day than the day after they delayed their Leopard OS launch date to accommodate the iPhone: it saw 22,123 of the APR07 $90 PUTS trade.

Jon C. Ogg
April 14, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.