Smith International Sees Options Surge (SII)

Posted in Options 
September 22nd, 2009

Smith International Inc. (NYSE: SII) has been under-performing and still cannot close above its 200 day EMA, but there is bullish action in the name today with shares at $29.37 as more than 4,000 November $32 calls are bought offer side in a large block trade.  Smith is looking to breakout at $30, and shares are beginning to look cheap to peers at 12.4X free cash flow and 11.4X trailing earnings.
UPDATE at 2:20 PM EST: since then around 11,000 more calls have traded at that strike.  Shares are now up over 5% at $29.60 on volume of 3.6 million shares versus an average daily volume of 5.1 million shares.  Smith (SII) is an oil services company and there has been consolidation in the sector when BJ Services (BJS) entered into a deal with Baker Hughes (BHI).

-Joe Kunkle, OptionsHawk.com

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