Options Brief: Office Depot (ODP)

ODP – Office Depot, Inc. – Investors expecting Office Depot’s share price to head higher purchased in- and out-of-the-money call options on the retailer of office supplies during morning trading even though the price of the underlying stock declined as much as 2.5% to touch an intraday low of $3.94 before 11:00 am (ET) today. Plain-vanilla call buyers should pat themselves on the back because ODP’s shares have since reversed course to rally more than 4.95% in the past hour to trade at $4.24 as of 11:50 am (ET). Bullish traders scooped up more than 1,300 in-the-money calls at the August $4.0 strike for an average premium of $0.50 per contract. Investors long the calls make money if Office Depot’s shares rally above the average breakeven price of $4.50 by August expiration. Longer-term optimistic individuals purchased at least 2,500 calls at the higher January 2011 $5.0 strike for a premium of $0.50 a-pop. Traders are prepared to accrue profits if the retailer’s shares surge 29.7% over the current price of $4.24 to trade above the average breakeven price of $5.50 by expiration day in January 2011.

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.

Interactive Brokers: Interactive Brokers offers direct market access to around 80 electronic global markets from a single account. Successful traders and investors understand that superior technology and lower trading costs can result in greater returns. For 32 years we have been building direct access trading technology that delivers real advantages to professionals worldwide. With consolidated equity capital of US $4.4 billion, IB and its affiliates exceed 1,000,000 trades per day. In addition, our prudent and conservative risk policies make Interactive Brokers a safe haven for your money. Discover some of the reasons why IB, the largest independent US broker/dealer, is the professional traders' and investors' choice.

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