TLB – The Talbots, Inc. – One optimistic options player purchased a plain-vanilla debit call spread on the retailer of women’s clothing, apparel, shoes and accessories in the first half of the trading session to prepare for the price of Talbots’ shares to appreciate ahead of August expiration. Shares of the underlying stock are currently up 2.1% at $10.25 as of 11:20 am (ET). The bullish investor picked up 3,504 calls at the August $11 strike for an average premium of $0.75 per contract, and sold the same number of calls at the higher August $12.5 strike for an average premium of $0.26 apiece. Average net premium paid to enact the spread amounts to $0.49 per contract. Thus, the TLB-bull stands ready to make money as long as the retailer’s shares rally another 12.1% to exceed the average breakeven price of $11.49 by August expiration day. Maximum potential profits of $1.01 per contract are available to the call-spreader if Talbots’ shares surge 21.95% over the current price of $10.25 to surpass $12.50 ahead of expiration.
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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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