Delta Air Lines Receives Contrarian Bullish Combo Play

Today’s tickers: DAL, AKAM, GG & IYR

DAL – Delta Air Lines, Inc. – One contrarian investor initiated a three-legged bullish options combination play on Delta Air Lines today with shares of the underlying stock trading lower by 6.25% on the day at $10.65 as of 12:55 pm ET. It looks like the trader is betting Delta’s shares are not likely to fall much lower ahead of expiration in January 2011. The investor sold 4,000 puts at the January 2011 $10 strike for premium of $1.17 each, shed another 4,000 puts at the lower January 2011 $9.0 strike for premium of $0.80 apiece, and finally purchased 4,000 calls at the higher January 2011 $12.5 strike at a premium of $0.98 a-pop. The transaction yields a net credit of $1.00 per contract to the investor, which he keeps in full as long as the airline’s shares exceed $10.00 through expiration day. The long stance in call options implies the potential for additional profits to be made should DAL’s shares surge 17.4% over the current price of $10.65 to surpass the $12.50-level ahead of expiration in January. If shares continue to descend, however, the investor could wind up having a total of 800,000 shares put to him in the event both chunks of puts at the January 2011 $10/$9.0 strikes land in-the-money at expiration.

AKAM – Akamai Technologies, Inc. – Bullish players are dominating trading activity in Akamai Technologies’ options this morning due to reports of renewed takeover chatter. Investors expecting AKAM’s shares to climb higher are scooping up call options in the August and September contracts. The firm’s shares are currently up 2.8% on the day to arrive at $45.30 as of 11:30 am ET. Traders purchased at least 4,200 now in-the-money calls at the August $45 strike for an average premium of $0.45 apiece. Call buyers at this strike make money if, by expiration tomorrow, Akamai’s shares exceed the average breakeven price of $45.45. Optimism spread to the September contract where traders picked up 1,100 call options at the September $49 strike for an average premium of $0.69 a-pop. Investors long the September $49 strike calls are positioning for AKAM’s shares to rally to a new 52-week high by expiration day next month. The current 52-week high on the stock is $46.72, but the price of the underlying stock would need to surge 9.7% over the current price of $45.30 in order for…

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