Masco Option Volumes Spike Higher

Masco Corporation (NYSE: MAS) shares dropped marginally despite heavy trading in the options market. The company saw some 11,744 call option contracts trade hands Wednesday, which is over 9x the average daily trading volume of 1,252 contracts. The majority of the action took place in the October $20 calls followed by the November $20 calls. However, there was also a substantial number of October $25 calls purchased as well.

The action in Masco’s options could suggest that traders’ believe that shares are headed nearly 12% higher during the next 16 days. Meanwhile, the action at the $25 strike could represent an even more bullish bet that shares are headed to $25 a piece during the same time period. These strong bets come despite no new developments on the company or any indications that volatility may be approaching soon.

Masco Corporation manufactures, distributes and installs home improvement and building products. Masco primarily sells cabinets and related products, which includes assembled and ready-to-assemble kitchen and bath cabinets, home office workstations, storage products, bookcases, and kitchen utility products. Shares closed down marginally on Wednesday’s trading session while options prices were mixed on the session.

Mylan Options Predict 10% Jump

Mylan Inc. (NYSE: MYL) shares dropped marginally after a day of heavy trading in both stock and options. Call options saw the heaviest trading around the October $12.50 strike, which suggests that traders’ believe shares will appreciate more than 10% over the next 16 days. This bullish sentiment led to an above-average number of shares being traded, but no substantial directional movement throughout the day on Wednesday.

Last quarter, the largest U.S. maker of generic drugs reported a higher-than-expected profit while raising its 2008 forecast on growth of its Merck KGaA purchase in October. Products acquired from the German manufacturer, helped Mylan’s revenues more than double while earnings beat by analyst estimates by 60% at 10 cents per share. Meanwhile, growth in international markets helped Mylan to increase its full-year earnings.

Makers of generic drugs have expanded internationally as increased competition has eroded market share in the United Sates. Mylan actually paid more than its own market value for Merck’s generics business in order to increase manufacturing capacity and reach the fast-growing European markets. The investment, which initially drew skepticim, is now paying off for shareholders as it returns nice dividends in an otherwise down market in the states.

Mylan Inc. (Mylan), formerly Mylan Laboratories Inc., and its subsidiaries comprise a global pharmaceutical company that develops, licenses, manufactures, markets and distributes generic, brand and branded generic pharmaceutical products and active pharmaceutical ingredients (API). Through Matrix Laboratories Limited (Matrix), an company in which Mylan has a 71.5% controlling interest, it manufactures and supplies API for its own products and pipeline, as well as for third parties.

Jabil Options Surge Higher

Jabil Circuit, Inc. (JBL) shares soared higher Tuesday after analysts noted that the stock should trade in-line with the industry median. The news comes after the firm reported strong fourth quarter earnings that bumped the upper end of its range for first quarter earnings and revenues. In this environment, that was good enough for investors, and Zack’s recent report only further stokes investor confidence in this stock.

Options on Jabil also surged higher during Tuesday’s session. Call option volume hit 18,291 contracts, which is nearly 7x the average daily volume of 2,685 contracts. Strangely, the majority of the action was centered on the December $12.50 calls, which suggests long-term confidence in the company at a price substantially higher than today’s close. This led to speculation that a big investor is making big bets or someone knows something the public doesn’t know.

Revenue for the Jabil’s recent quarter came in at $3.2 billion, which represents a 4.3% increase year over year. The number was also in line with company guidance of $3.2 billion to $3.3 billion. EPS in the quarter was $0.28, compared to just $0.06 during the same time last year. Jabil expects revenues in the range of $3.4 billion and $3.6 billion during the first quarter of 2009 with operating margins between 3% and 3.4% and core EPS between $0.30 and $0.38 per share.

Jabil Circuit is a provider of worldwide electronic manufacturing services and solutions. The company provides electronics and mechanical design, production, product management and after-market services to companies in the aerospace, automotive, computing, consumer, defense, industrial, instrumentation, medical, networking, peripherals, storage and telecommunications industries. It offers its customers electronics and mechanical design, production, product management and after-market solutions that are responsive to their manufacturing needs.

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