Today’s tickers: FLO, JPM & SFD
FLO - Flowers Foods, Inc. – Shares in the provider of packaged bakery products are up nearly 7% this morning at $23.86 as of 11:35 a.m. after the stock was raised to ‘buy’ from ‘hold’ with a 12-month target price of $25.00 at Keybanc Capital Markets. Flowers Foods, Inc., which sells its products under a number of brands, including Sunbeam and Tastykake, has attracted far greater-than-usual options activity in recent trading sessions on speculation the Thomasville, Georgia-based baker may consider purchasing some of rival Hostess Brands, Inc.’s assets as that company enters bankruptcy proceedings this week. Flowers Foods shares are up nearly 30% since Monday of last week. Traders positioning for shares in the name to extend gains purchased upside calls on Flowers this morning. The Dec. $25 strike call was purchased 50 times for a premium of $0.15 apiece, while 140 of the Jan. 2013 $25 strike calls were picked up at an average premium of $0.33 each. These contracts make money if shares in the name hit fresh 52-week highs by their respective expiration dates. Meanwhile, strategists who established bullish positions last week are seeing sizable gains in the value of their option contracts as shares sprint to the upside. The purchaser of 90 calls at the Dec. $20 strike last Monday for a premium of $0.30 apiece now holds contracts that cost $3.90 apiece, or thirteen times as much, as of midday in New York. Similarly, traders who picked up 180 of the April 2013 $22.5 strike calls at $0.90 apiece on Friday, find the value of their contracts increased 120% to $2.00 since the prior trading session. Finally, put buying at the $22.5 strikes in January and April indicates some traders are establishing downside protection to hedge possible declines in the price of the underlying in the months ahead. Overall options volume on Flowers this morning is greater than 1,050 contracts versus the stock’s average daily options volume of 45 contracts.…
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