Options Brief: Bulls Bombard Newell Rubbermaid Call Options

NWL – Newell Rubbermaid, Inc. – Shares of the global marketer of consumer and commercial products are up 1.98% to $16.99 as of 12:15 pm (ET), and earlier rallied as much as 5.00% to touch an intraday high of $17.50. Newell Rubbermaid’s shares jumped on news the company will utilize Avon Products Inc.’s 1.2 million door-to-door salespeople to sell its food-storage goods in Brazil. The door-to-door approach to expanding NWL’s market presence is a relatively cheap approach to injecting its Rubbermaid brand name into developing markets. Newell Rubbermaid also revealed plans to sell its food-storage goods in retail stores in Brazil. Bullish options investors were eager to act on the Avon-Rubbermaid news and purchased call options in the June and July contracts. Investors picked up roughly 4,200 calls at the June $17.5 strike for an average premium of $0.51 apiece, thus positioning for shares to exceed $18.01 ahead of expiration day this month. Optimism spread to the higher June $20 strike where traders purchased 1,700 calls at an average premium of $0.17 each. Investors long the June $20 strike calls make money if shares of the underlying stock surge 18.7% to surpass the average breakeven price of $20.17 by expiration. Buying interest continued at the July $20 strike as bullish players scooped up 1,600 calls for an average premium of $0.26 per contract. July contract call coveters profit only if Rubbermaid’s shares jump 19.25% over the current price of $16.99 to exceed the average breakeven point on the calls at $20.26 by July expiration. The surge in investor demand for call options on NWL lifted the stock’s overall reading of options implied volatility by 10.9% to 43.88% as of 12:27 pm (ET).

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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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