Today's tickers: SLM, XHB, F, INTC & XLF

SLM - SLM Corporation - Sallie Mae edged onto our ‘most active by options volume' market scanner today amid a more than 10.5% surge in shares to $10.28. Shares of the biggest provider of U.S. student loans were lifted after FBR Capital Markets raised the stock's price estimate. The bullish sentiment has some investors expecting continued bullish movement in the stock as evidence by the fresh call buying interest observed in the July contract. Approximately 1,500 calls were purchased at the July 11 strike price for an average premium of 43 cents each. Optimistic traders long of these contracts are hoping to see shares rise another 11% by expiration in order to amass profits beginning at the breakeven point at $11.43.

XHB - SPDR S&P Homebuilders Fund - Exactly one month ago at the end of May we observed a chunky option positioned initiated on the XHB. It was a bullish play at the time and shares have moved a little lower during the last four weeks. Today we cannot tell whether the investor is closing the call spread at a loss, but our intuition is that the investor is taking advantage of even cheaper premiums to expand exposure to a recovery in economic terms, which of course should show up later in the summer for a rally in homebuilders' share prices. We saw one option player transact an identical 25,000 lot call spread at the 15 and 17 strikes this morning for a net premium of just 10 cents. With almost three months before the trade expires it seems to us that this is a cheap play to try and take advantage of recovery prospects in the mortgage market. The original call spread initiated this time last month was put to work at a net cost of 30 cents. With shares today at $11.97 we'll have to await Tuesday's open interest data before determining whether this was opening or closing. The investor would require a summer rally of 25% to get to the $15.00 share price before this trade comes good.

F - Ford Motor Co. - Having found recent support at $5.25, shares of Ford Motor Co. are 3.4% higher Monday at $5.79. Since May, investors on two occasions have forced Ford's share price to a peak at $6.50, but if the option market is a good measure of what's coming down the turnpike, the next three weeks could see pessimism left behind in the dust with investors banking on a 20% rally of from here. So far today option investors have sucked up 18,700 call options expiring in July at the 7.0 strike paying a nickel for the privilege of securing rights to buy shares in the company at $7.00 at or before expiration. With GM and Chrysler in bankruptcy, affairs at Ford have become but a sideshow. The thawing in the economy still faces chill winds in the form of rising unemployment but recent auto-industry statistics seem to indicate that annualized sales of light-trucks and cars should soon return to a rate of 10 million units. The option market indicates that the chances of a 20% rally over the next three weeks are just one-in-ten.

INTC - Intel Corporation - Shares of the semiconductor chip maker have enjoyed a 1% rally to $16.49 while other technology companies weighed heavily on the tech sector today. Option traders were seen locking into recent gains by INTC by getting long of protective put options in the near-term July contract. Perhaps these investors jumped into put positions for fear of potential bearish movement in the price of the underlying by next month's expiration. The in-the-money July 17 strike price had nearly 12,800 put options purchased for an average premium of 80 cents per contract. More pessimistic put buyers looked to the lower July 15 strike where some 5,500 puts were coveted by traders for 12 cents apiece.

XLF - Financial Select Sector SPDR - The banking ETF is on the rise by about 1% to stand at the current price of $12.03. Bullish call buying was observed at the just in-the-money August 12 strike price where it appears that one investor scooped up more than 47,000 calls for an average premium of 75 cents per contract or an approximate total of $3,525,000. The breakeven point on the trade of $12.75 implies that shares must rally at least 6% from the current price before the trader may begin to realize profits from today's transaction.

Andrew Wilkinson
Senior Market Analyst
ibanalyst@interactivebrokers.com

Caitlin Duffy
Equity Options Analyst