PNRA – Panera Bread – Options investors are establishing bullish stances on the owner and franchiser of bakery-cafes today ahead of the firm’s second-quarter earnings report scheduled for release after the closing bell on July 27, 2010. Panera’s shares edged slightly lower in the first half of the session, dipping 0.15% to stand at $77.58 as of 11:45 am (ET). Optimistic individuals opted to enact credit put spreads in the August contract. Traders sold approximately 2,500 puts at the August $75 strike for an average premium of $2.13 apiece, and purchased the same number of puts at the lower August $70 strike for an average premium of $1.02 a-pop. Credit-spreaders pocket an average net credit of $1.11 per contract, and keep the full amount as long as PNRA shares exceed $75.00 through expiration day. Investors are vulnerable to losses should the price of the underlying stock fall 4.75% from the current price to breach the average breakeven point to the downside at $73.89. Maximum potential losses of $3.89 per contract accumulate for these investors should Panera’s shares plunge 9.8% to trade below $70.00 by August 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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