Options Brief: Charming Shoppes (CHRS)

CHRS – Charming Shoppes, Inc. – Optimistic options traders are selling short put options on Charming Shoppes just one week before the firm is scheduled to report first-quarter earnings before the opening bell on Thursday June 3, 2010. Charming Shoppes, Inc. is a multi-brand apparel retailer with market share in women’s plus-size specialty apparel. Investors exchanged 6,981 contracts on the stock by 12:30 pm (ET), which is more than 6.3 times greater than previously existing overall open interest of 1,106 contracts. Bullish trading patterns initiated on CHRS were perhaps inspired by the 4.6% jump in the price of the underlying stock to $4.79. Investors sold approximately 5,600 in-the-money puts at the October $5.0 strike to pocket an average premium of $0.77 per contract. Put sellers keep the full premium received on the sale if shares of the underlying stock rally above $5.00 by expiration. Charming Shoppes’ shares traded above $5.00 as recently as May 20, 2010, when the stock touched an intraday high of $5.08. Investors short the put contracts are apparently happy to have shares of the underlying stock put to them at an effective price of $4.23 each if the puts land in-the-money at expiration.

About Andrew Wilkinson 1023 Articles

Affiliation: Interactive Brokers

Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.

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