Stock Options Watch: POT, CHRW, HD

POT – Potash Corporation of Saskatchewan, Inc. – Options activity on Potash Corp on Monday morning suggests some traders are positioning for shares in the name to continue to rebound in the near term. Shares in POT, down more than 25% since the start of the year, rose 2.4% this morning to $30.59 by 11:35 a.m. ET. Traders looking for shares in Potash to extend gains ahead of the holiday weekend snapped up weekly calls on the stock. Upwards of 1,700 of the Aug 30 ’13 $31.5 strike calls changed hands during the first few hours of the session versus open interest of 51 contracts, with much of the volume purchased at an average premium of $0.26 each. Traders long the $31.5 calls stand ready to profit at expiration in the event that POT’s shares rally another 4.0% over the current price of $30.59 to exceed the average breakeven price of $31.76. The higher Aug 30 ’13 $32 calls are also active today, with around 600 lots purchased for an average premium of $0.16 apiece. Buyers of the $32 weekly calls may profit at expiration if shares in Potash Corp rally 5.0% to settle above the breakeven price of $32.16. Finally, trading in the Oct $32 call options also appears to be bullish on the potential for continued gains in POT shares. Roughly 1,200 of the Oct $32 calls traded this morning against open interest of 731 contracts, with much of the volume purchased for an average premium of $1.21 apiece. Options players long the Oct $32 calls make money at expiration if shares in the potash producer jump more than 8.0% during the next seven weeks to top $33.21.

CHRW – C.H. Robinson Worldwide, Inc. – Options volume on transportation services company, C.H. Robinson, is elevated on Monday, with more than 10,000 contracts in play as of midday versus average daily options volume of around 2,900 contracts. Much of the activity is in CHRW calls, driving the call/put ratio on the stock to 2.9 as of the time of this writing. Shares in C.H. Robinson are up 3.5% at $59.24, the highest level in three weeks, as of 12:05 p.m. ET. Traders positioning for shares in C.H. Robinson to extend gains in the near term snapped up September expiry calls on the name. More than 1,500 of the Sep $62.5 strike calls traded during the first half of the session, roughly double open interest of 781 contracts at that strike. Time and sales data suggests most of the $62.5 calls were purchased for an average premium of $0.29 apiece. Call buyers stand ready to profit at expiration next month in the event that CHRW shares rally another 6.0% to surpass the average breakeven point at $62.79. Shares in C.H. Robinson last traded above $62.79 in February.

HD – Home Depot, Inc. – Fresh interest in weekly calls on Home Depot looks for a quick pop in shares of the home improvement retailer during the next four trading sessions to expiration. The stock today trades 2.5% higher on the day at $75.78 as of 12:15 p.m. ET. The most actively traded weekly options on HD as of the time of this writing are the Aug 30 ’13 $77.5 strike calls, with roughly 1,150 lots in play versus open interest of 102 contracts. It looks like most of the volume was purchased in the early going for an average premium of $0.15 apiece. Buyers of the $77.5 weekly calls stand ready to profit at expiration should shares in Home Depot rise 2.5% over the current price of $75.78 to trade above the average breakeven point at $77.65.

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.

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