HGG – HHGregg, Inc. – Shares of the specialty retailer of consumer electronics, home appliances and related services increased as much as 19.3% at the start of the trading session to grab hold of an intraday high of $25.42. HHGregg’s shares were unable to hold onto the majority of the initial rally, but are still up 6.6% at $22.71 as of 2:15 pm ET. The price of the underlying stock jumped after the firm announced better-than-expected sales and profits for the first quarter. HGG earned $0.07 a share, which is more than twice the consensus forecast of $0.03 per share. Investors expecting HHGregg’s shares to surpass the intraday high of $25.42 by September expiration purchased call options on the stock. Bulls picked up approximately 1,200 calls at the September $25 strike for an average premium of $1.08 a-pop. Call buyers make money if HGG’s shares surge 14.8% over the current price of $22.71 to exceed the average breakeven point to the upside at $26.08 by expiration day next month. Approximately 1,958 calls changed hands at the September $25 strike today versus previously existing open interest at that strike of just 2 contracts. The regional U.S. electronics retailer’s shares last traded above $26.08 back on June 28, 2010.
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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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