Eastman Kodak fell 11 percent yesterday on a plan to dilute its shares, but options action took a bullish turn for the second time this week.
OptionMonster's tracking systemsdetected heavy buying of the April 6 calls, which traded 79,210 times—more than 750 times existing open interest in the strike. Large institutional-sized transactions, priced from $1.80 to $2.15, accounted for most of the volume.
Kodak dropped to $5.93 percent after announcing a plan to issue warrants allowing private equity firm Kohlberg Kravis Roberts to buy 53 million shares in exchange for a commitment to purchase $400 million of debt securities from the photography company. Kodak will also sell $300 million of notes convertible into shares.
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The stock needs to climb about 35 percent by expiration for the calls to turn a profit. Kodak was the target of bullish call buying Tuesday as well.
Volume also surged yesterday in the January 2011 10 puts, which investors sold to earn premium. Some 54,234 contracts changed hands for $4.60 to $5.36 against open interest of 2,921.
Other investors sold the January 2011 10 calls, probably against holdings in the stock. The calls traded 32,618 times against open interest of 3,176, with institutional-sized transactions for $1.10 to $1.25 accounting for most of the activity.
The three strikes accounted for 69 percent of the total options volume in the name, which was 30 times greater than average levels.
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David Russell is a reporter and writer for OptionMonster.