Stock Options Watch: M, FSYS, TMUS

M – Macy’s Inc. – Call options changing hands on Macy’s during morning trading suggests at least one strategist is taking a bullish stance on the stock ahead of the retailer’s second-quarter earnings report next Wednesday. Shares in the name are slightly in the red today, down 0.20% at $47.74 just before midday in New York. The stock has slipped roughly 6.0% in recent weeks from a record high of $50.77 reached back in July. Trading traffic in Aug $48.5 strike calls initiated during the first 10 minutes of the session indicates one trader is preparing for shares to move higher ahead of expiration next week. It looks like the strategist purchased 1,500 of the $48.5 calls for a premium of $0.76 apiece. The bullish position makes money at expiration in the event that Macy’s shares rise more than 3.0% to exceed the breakeven price of $49.26.

FSYS – Fuel Systems Solutions, Inc. – Shares in Fuel Systems are soaring on Thursday, rising nearly 23% to touch a new 52-week high of $21.44, after the company posted better than expected second-quarter earnings ahead of the opening bell this morning. Options traders positioning for the price of the underlying to extend gains in the near term snapped up August expiry calls in the early going. The most traded front month options are the Aug $21 strike calls, with upwards of 870 lots in play versus open interest of 286 contracts. Time and sales data indicates most of the volume was purchased during the first 10 minutes of the session for an average premium of $0.30 apiece. Call buyers stand ready to profit at expiration next week in the event that FSYS shares settle above the average breakeven price of $21.30. Intraday gains in the price of the underlying since the $21 strike calls were purchased this morning has lifted the asking price on the contracts to $0.80 apiece as of midday in New York. Bullish action spread to the September expiry options as well, with 200 of the Sep $23 strike calls picked up at a premium of $0.30 each during morning trading. The $23 calls may be profitable at expiration next month if shares in Fuel Systems Solutions surge 8.7% over today’s high of $21.44 to top the breakeven price of $23.30.

TMUS – T-Mobile US Inc. – Upside call options are changing hands on T-Mobile this morning, with shares in the wireless provider up 4.1% at $25.00 following the company’s second-quarter earnings report released ahead of the opening bell. Fresh interest in Sep $25 strike calls suggests one or more strategists are positioning for the price of the underlying to extend gains in the near term. Upwards of 1,000 $25 calls were snapped up during the first 30 minutes of the trading day for an average premium of $1.69 apiece, thus positioning buyers to profit at expiration next month given a more than 6.5% upside move in the price of the underlying to top the breakeven price of $26.69. Trading in call options on TMUS is outpacing that of puts, with the call/put ratio hovering around 4.0 as of the midday.

About Caitlin Duffy 373 Articles

Affiliation: Interactive Brokers

Caitlin Duffy joined Interactive Brokers in 2009. In her role as Equity Options Analyst, Caitlin provides daily market commentary; highlighting various options trades, trading patterns and strategies of interest. Through Interactive Broker's webinar program, Ms. Duffy presents a number of educational, options-related events describing the theoretical pricing of options, the option Greeks as well as options strategies.

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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