“Interesting” Options Trades: Patterson Companies (PDCO), Zoetis Inc. (ZTS)

There’s been a bunch of interesting and unusual options trades today, as we carry on with earnings season.  But, two trades caught our eye on a second look due to the fact that they are in a related business, pet and veterinary medicine.  The first was in Patterson Companies (PDCO) and the second was in Zoetis Inc. (ZTS).

Unusual Call Option Buy in Patterson Companies (PDCO)

This afternoon a trader bought 1,500 of the January $37 call options in Patterson Companies (PDCO) at a price of $3.40 per contract.  That makes this a nice bet of $500,000 or so.

PDCO is currently trading today at $39.11 up 43 cents or 1.11%.  It is a profitable company with a PE of about 20 times earnings and a market cap of just over 4 billion dollars.

Patterson Companies (PDCO) is a distributor of dental health and veterinary supplies fordogs, cats and other common household pets and equine veterinary supply as well. 

PDCO announces earnings on August 18, 2014.

This unusual options buy is interesting on its own, but even more interesting when you look at the other unusual trade in Zoetis Inc. (ZTS)

 

Unusual Call Buyer Hits up Zoetis (ZTS)

00047_Zoetis-Logo

Not long after the trade in PDCO, we saw an unusual call buyer in Zoetis, which develops, manufacturers and markets animal health medicines and vaccines, with a focus on both livestock and pets.  Coincidence?  We don’t believe in coincidences when it comes to the options market.

Zoetis (ZTS) is trading at $32.72 today, up 51 cents or 1.57% as of 3:30 pm Friday.  It’s been on a steady climb today, unlike PDCO which started to take off around 1:50 PM when a large trade went through.

Interestingly. the trader bought the July 25th $33 calls (2657 contracts) at 15 cents.  ZTS doesn’t announce earnings until August 5, making this buy unrelated to earnings in our eyes.  So one plausible catalyst could be a merger of the two companies, Zoetis, and Patterson.

Obviously, we could be totally wrong on the two trades being related to each other.  But just in case, we have jumped in with copycat trades on both of these options.  However the 7/25 ZTS calls scared us given the short time frame, so we are in the August $33 calls.  Interestingly 1261 of the August calls have traded so far today.

Have a good weekend everyone.