ACN – Accenture PLC – Shares of the global management consulting, technology services and outsourcing firm jumped 8.65% to reach an intraday high of $40.80 in the first half of the trading session and inspired many options investors to shed bearish put contracts and purchase calls on the stock. The second-largest technology consulting company posted third-quarter net income of $0.73 a share after the closing bell on Thursday, which blew right past average analyst estimates of $0.69 per share. Better-than-expected earnings for the third-quarter took the wind out of bears’ sails and prompted traders to sell 2,800 puts at the July $35 strike for a premium of $0.05 per contract. It looks like the July $35 strike puts may have been purchased yesterday for an average premium of $0.40 apiece by investors bracing for Accenture’s shares to fall following third-quarter earnings. But, premium on the puts collapsed with today’s sharp rally in ACN’s shares, and traders ditched the contracts to take in the meager premium left on the table. Optimism spread to the higher July $37.5 strike where roughly 1,400 puts were sold for an average premium of $0.29 apiece. Investors are perhaps selling short puts at the July $37.5 strike, in which case they keep the full $0.29 premium per contract received today as long as Accenture’s shares exceed $37.50 through expiration day. Outright bullish bets that shares will continue to rally ahead of July expiration were initiated at the July $40 strike where some 2,000 now in-the-money calls options were purchased at an average premium of $1.06 a-pop. Investors long the call options are positioned to profit should Accenture’s share price exceed the average breakeven point at $41.06 by expiration day next month. Finally, optimistic players sold short 2,500 puts at the August $35 strike to pocket an average premium of $0.22 per contract. Put sellers at this strike price keep the full premium received on the transaction as long as shares of the underlying stock trade above $35.00 through expiration in August.
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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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