Discover call-options trading surges before earnings
Discover Financial Services call- options trading jumped to triple the four-week average amid wagers that the payments processor whose stock has outperformed its three larger U.S. rivals this year will rally after its Dec. 16 earnings report.
More than 5,800 calls to buy the stock changed hands, 10 times the number of puts to sell, as of 11:30 a.m. in New York. Almost all off the volume was concentrated in December $20 calls, which traded 5,524 times today compared with 1,533 existing contracts before today. The stock rose 0.5 percent to $18.86. This month's options expire at the close of trading on Dec. 17.
Discover may report profit excluding some items of 42 cents a share next week, the average of 17 estimates in a Bloomberg survey. The Riverwoods, Illinois-based company has climbed 28 percent this year through yesterday, compared with a 13 percent gain for American Express Co. and losses of 9.5 percent for Visa Inc. and 1.9 percent for MasterCard Inc.
Discover's implied volatility, the key gauge of option prices, for at-the-money options expiring in 30 days rose to 34.90 from 34.11 yesterday.