October 1, 2013 / 4:25 PM / 4 years ago

STOCK NEWS US-Monsanto options imply about 3.25 pct earnings move

Real-time equity news [E U] U.S. stock market report 1213 ET 01Oct2013 Monsanto options imply one-day earnings move of about 3.25 pct --------------------------------------------------------------------------------

The options market is implying about a 3.25 percent one-day move for Monsanto Co’s shares, up or down, on earnings, said Enis Taner, global macro editor at RiskReversal.com in an earnings preview on Tuesday.

Monsanto, the world’s largest seed company, is due to report fiscal fourth-quarter earnings on Wednesday before the market’s open.

The shares have realized an average move of about 1.6 percent over the past four quarters and an average move of about 3 percent over the past eight earnings announcements.

Wall Street analysts are generally positive on the stock, with 20 buys, five holds and one sell, with an average 12-month price target of around $120. Despite the analyst optimism, the stock has lagged the broader market in 2013, and is up around 10 percent for the year so far, Taner said.

Options open interest is evenly balanced between calls and puts. The bulk of the open interest is in the October and January 2014 terms, with the $110 strike calls having a large amount of open interest in both expiries, he said. The January 2014 $90 strike puts also have significant open interest. The stock’s high in 2013 was $109.33 in mid-May.

Overall option volume on the stock consisted of 1,756 calls and 1,792 puts traded during the first half of Tuesday’s trading session, according to Trade Alert.

Reuters Messaging: doris.frankel.reuters.com@reuters.net

1053 ET 01Oct2013 Merck call options in play after cost-cutting plans --------------------------------------------------------------------------------

Shares of Merck & Co rose 2.35 percent to $48.73 early on Tuesday and options on the stock are busy after the U.S. drugmaker said it plans to cut annual operating costs by $2.5 billion and eliminate 8,500 jobs.

About 25,000 calls and 6,059 puts traded so far in Merck on Tuesday morning, according to Trade Alert. The top trade is a ratio call spread, in which the investor sold 2,000 November $49 strike calls at $1.18 and bought 5,000 November $50 strike calls at 83 cents, said WhatsTrading.com options strategist Frederic Ruffy. The strategist surmised the activity might be a roll of a position up in strikes after Tuesday’s gap higher lifted shares to multi-month intraday highs of $49.23. The October $48, $49 and $50 strike calls on Merck are actively traded as well and 30-day implied volatility is steady around 18 percent, which is in the 80th percentile of the 52-week range, Ruffy said.

The company is due to report earnings on Oct. 28.

Reuters Messaging: doris.frankel.reuters.com@reuters.net 1005 ET 01Oct2013 Total option open interest increases by 4.73 mln contracts --------------------------------------------------------------------------------

A total of 15.4 million contracts changed hands in the U.S.-listed options market on Monday, resulting in net open interest growth of 2.18 million calls and 2.55 million puts, according to Trade Alert.

Facebook Inc, SandRidge Energy Inc, Micron Technology Inc and Bank of America Corp attracted the greatest growth in option open positions, data from Trade Alert showed.

The top five new positions opened include 78,000 Sandridge March 2014 $6 strike puts, 27,000 Achillion Pharmaceuticals Inc November $3 strike calls, 20,000 Phillips 66 May 2014 $57.50 strike puts, 15,000 Marathon Petroleum Corp April 2014 $62.50 strike puts and 14,000 J.C. Penney Company Inc January 2014 $9 strike puts, Trade Alert said.

Reuters Messaging: doris.frankel.reuters.com@reuters.net

0730 ET 01Oct2013-Economic and earnings diary for Oct. 1 ----------------------------------------------------------------------------- Economic data scheduled for Tuesday includes the final U.S. Markit Manufacturing PMI for September and the Institute for Supply Management’s September manufacturing index.

Walgreen Co, the only S&P 500 company due to report earnings, posted results earlier on Tuesday.

Charles.mikolajczak@thomsonreuters.com; +1 646 223 5234; Reuters Messaging: Charles.mikolajczak.thomsonreuters.com@reuters.net

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