Qualcomm ( QCOM - news - people ):Options traders are positioning for a near-term recovery in shares of the provider of digital wireless telecommunications products and services. Investors piled into call options on QCOM Monday even though shares of the underlying stock slipped 1.65% to $36.08. Optimistic individuals purchased roughly 7,100 in-the-money calls at the March $36 strike for an average premium of $1.01 apiece. Investors long the calls stand ready to accrue profits if Qualcomms share price surpasses $37.01 ahead of March expiration. Qualcomm options traders exchanged 108,245 contracts on the stock by 12:55 p.m.  Ford Motor Co. ( F - news - people ): Shares of the automaker jumped 5% during the session to a new 52-week high of $12.34 after increasing its production target in Europe for the first-quarter on higher-than-expected sales of its Fiesta and Ka models. Bullish options trading ensued during the session as some individuals ramped up optimistic positions on the stock. One investor rolled a long call position to a higher strike price and augmented the size of the position to extend bullish sentiment to the April contract. The trader sold 5,000 now in-the-money calls at the March $12 strike for a premium of $0.40 apiece in order to buy 10,000 calls at the higher April $13 strike for an average premium of $0.25 each. The net cost of the transaction amounts to $0.10 per contract on account of the ratio nature of the combination and positions the investor to amass profits above a breakeven price of $13.10 by expiration in April. Traders exchanged more than 144,000 option contracts on Ford Motor Company in the first half of the trading day.  iShares FTSE/Xinhua China 25 Index FXI: Shares of the China exchange-traded fund, which invests in 25 of the largest and most liquid Chinese companies, are up 2.75% to $40.68. One options transaction on the fund, however, suggests the current rally may be short-lived. The so-called bearish risk reversal enacted on the FXI indicates one investor expects shares of the underlying fund to fall by April expiration. The investor sold 8,100 calls at the April $44 strike for an average premium of $0.45 apiece in order to buy the same number of put options at the lower April $36 strike for $0.46 each. The net cost of the reversal play amounts to just one penny per contract. Perhaps the trader is long shares of the underlying fund and is securing cheap downside protection in case the price per share declines ahead of April expiration. The short call position used to finance the put purchase suggests the trader is willing to have shares called from him if the FXIs price per share exceeds $44 ahead of expiration day next month.  SLM Corp. ( SLM - news - people ):Bearish investors bombarded the student loan facilitator, familiarly known as Sallie Mae, Monday as shares slipped 2% lower to stand at $10.95 each. April contract put options are in demand, with the current days volume at the April $9 and $10 strikes exceeding existing open interest levels at those strikes. Investors purchased nearly 8,000 puts at the April $9 strike for an average premium of $0.19 apiece. Put-buyers are perhaps anticipating continued bearish movement in the price of the underlying stock through expiration next month. The puts yield profits to the downside if SLM shares plummet at least 19.5% to breach the breakeven price of $8.81 by expiration. Options traders also picked up about 3,500 puts at the April $10 strike for a premium of $0.33 each. These contracts yield profits beneath a breakeven share price of $8.67 through expiration in April.  Forest Laboratories ( FRX - news - people ):Bullish investors dominated options trading activity on the pharmaceuticals firm Monday with shares of the underlying stock up 1% to $30.18. FRX shares are up perhaps on news the Food and Drug Administration has rescheduled a meeting to review the firms Daxas lung treatment on April 7, 2010. Optimistic traders initiated bullish positions on FRX in the April contract to prepare for potential share price improvement following the FDA meeting in April. Investors purchased 3,600 in-the-money calls at the April $30 strike for an average premium of $1.35 apiece. Forests shares must trade above the breakeven price of $31.35 by April expiration for in-the-money call buyers to amass profits. Bulls targeted the higher April $32.5 strike as well, buying 4,100 call options for an average premium of $0.36 each. Investors long these contracts profit if shares of the underlying rally at least 8.90% from the current value of the stock to breach the breakeven point at $32.86 by expiration day. Options implied volatility is up sharply by 32.80% to 29.25% on FRX due to increased demand for options on the stock and greater uncertainty ahead of the FDA meeting next month.  Andrew Wilkinson is senior market analyst at Greenwich, Conn.-based Interactive Brokers. Caitlin Duffy also contributes to Options Flash. Reach both via e-mail: ibanalyst@interactivebrokers.com, and follow their U.S. equity options comments on Twitter @IBCommentary.
The maker of chips for mobile phones is down today but bullish options players are loading up on calls.