GMCR – Green Mountain Coffee Roasters, Inc. – Shares of the specialty coffee company rallied as much as 10.2% today to reach an intraday high of $31.60 after reporting better-than-expected third-quarter results on Wednesday. GMCR’s shares are currently up 8.20% to $31.02 as of 11:55 am ET. The firm posted third-quarter net income, excluding items, of $0.19 a share, which beat average analyst estimates of $0.18 a share. One options trader was well positioned for the current surge in the price of the underlying shares. It looks like this individual booked profits by selling a previously established long call position in the August contract, and subsequently initiated longer-term bullish stance on the stock by purchasing a fresh chunk of calls in the December contract. The investor appears to have originally purchased roughly 7,690 calls at the August $29 strike for an average premium of $1.90 each back on July 22. Today, with the August $29 calls currently in-the-money, the trader sold 7,690 lots at a premium of $2.40 per contract. Net profits on the sale amount to $0.50 per contract. Next, the options player looked to the December $30 strike to purchase 7,690 in-the-money calls for premium of $3.83 a-pop. Profits on the new position start to amass should Green Mountain Coffee’s shares rally another 9.05% over the current price of $31.02, exceed the current 52-week high of $33.20, to surpass the effective breakeven price of $33.83 by expiration day in December. As of 12:05 pm ET, the overall reading of options implied volatility on the stock is down 27.6% to 38.10% post-earnings.
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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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