Today’s tickers: TSCO, INFY, AOL & HBI
TSCO - Tractor Supply Co. – Bullish players paid Tractor Supply Co. options a visit at the start of the U.S. trading week with shares in the operator of retail farm and ranch stores increasing as much as 2.4% to a new all-time high of $69.45. Investors expecting shares in the specialty retailer to extend gains in the near term exchanged more than 1,400 calls at the July $70 strike against previously existing open interest of 265 contracts. It looks like most of the calls were purchased for an average premium of $0.77 apiece. Call buyers make money if shares in Tractor Supply rally another 1.9% over today’s high of $69.45 to surpass the average breakeven price of $70.77 by July expiration. Put options in the front month attracted some attention, as well. Investors betting shares in TSCO are likely to exceed $60.00 through expiration day sold 267 puts at the July $60 strike for an average premium of $0.09 each. Meanwhile, some 300 puts were purchased for an average premium of $0.40 up at the July $65 strike. The rise in demand for options on the stock helped lift options implied volatility on the stock 7.2% to 31.84% by 11:30 am ET. July contract call and put options expire ahead of Tractor Supply Co.’s second-quarter earnings report after the final bell on July 20.
INFY - Infosys Technologies Ltd. – Shares in Infosys have been in recovery-mode since touching down at a 6-month low of $60.30 two weeks prior. The stock gained 9.7% to trade as high as $66.14 this morning, but options activity on the stock today suggests one strategist is poised to benefit from a pull back in the price of the underlying. The provider of IT services and solutions is expected to report first-quarter results ahead of the opening bell one week from today. Shares in Infosys Technologies are currently up 0.75% at $66.55 in early-afternoon trade. The put player responsible for nearly all of the options activity on INFY today may be hedging a long position in the underlying shares, or could be taking an outright bearish stance on the stock heading into earnings. It looks like the investor picked up 4,900 in-the-money puts at the July $67.5 strike for a premium of $2.55 each, and sold the same number of puts at the lower July $65 strike at a premium of $1.20 apiece. Net premium paid to initiate the spread amounts to $1.35 per contract. The trader makes money on the position if shares in Infosys slide 0.60% to trade beneath the effective breakeven price of $66.15 at expiration. Maximum potential profits of $1.15 per contract pad the investor’s wallet if the price of the underlying falls 2.3% in the next couple of weeks to trade beneath $65.00 through July expiration day.
AOL - AOL, Inc. – Shares in the global web services company are down 1.8% at $20.18 just before midday on the East Coast, but traders populating AOL, Inc. options earlier in the session appear to be positioning for a rebound in the price of the underlying by August expiration. It looks like investors sold puts in order to partially finance the purchase of bull call spreads. The three-legged combo involved the sale of around 300 puts at the August $19 strike for an average premium of $0.39 each, against the purchase of the 300-lot August $21/$23 call spread for an average premium of $0.48 apiece. The net cost of initiating the debit call spread is reduced to just $0.09 per contract after factoring in premium received on the sale of the put options. Thus, investors profit in the event that AOL’s shares rally 4.5% over the current price of $20.18 to surpass the average breakeven price of $21.09 by expiration day in August. Maximum potential profits of $1.91 per contract are available on the three-way spread should shares surge 14.0% to trade above $23.00 at expiration. The short stance in August $19 strike puts indicates traders are willing to have shares put to them at expiration in the event that the options land in-the-money. Options implied volatility on AOL, Inc. is up 6.5% at 31.05% as of 11:45 am ET. The company is scheduled to report second-quarter earnings ahead of the open on August 3.
HBI - Hanesbrands Inc. – Call options on the consumer goods company are in demand today with a little more than two weeks to go before the Winston-Salem, NC-based company reports second-quarter earnings after the close of trading on July 20. Shares in the operator of a portfolio of apparel brands including Hanes, Champion and L’eggs rose 1.05% to $29.76 by 11:55 am in New York. Investors expecting shares to continue to rise traded roughly 1,300 calls at the August $30 strike against paltry previously existing open interest of just 42 contracts. It looks like the majority of the calls were purchased for an average premium of $1.36 a-pop. Call buyers profit in the event that shares in HBI jump 5.4% to exceed the average breakeven price of $31.36 at expiration next month. The rise in demand for Hanesbrands call options helped lift options implied volatility on the stock 7.7% to 36.68% in the first half of the trading day.
Andrew Wilkinson
Senior Market Analyst
[email protected]
Caitlin Duffy
Equity Options Analyst
Tags: AOL, HBI, INFY, TSCO
