KR – The Kroger Co. – Options investors are snatching up both call and put options on the nation’s largest traditional grocery retailer today two weeks ahead of the firm’s scheduled June 17 first-quarter earnings announcement. June contract options expire the day after the firm reports earnings. Kroger’s shares edged 0.70% lower just before 12:00 pm (ET) to stand at $19.92. Investor demand for calls and puts in the June contract lifted the stock’s overall reading of options implied volatility 7.3% to 33.40% in the first half of the trading day. Investors taking a bearish stance on the grocer purchased 3,200 puts at the June $19 strike for an average premium of $0.18 each. Another 2,700 now in-the-money puts were picked up at the June $20 strike for an average premium of $0.45 apiece. In-the-money put buyers make money if, by expiration, Kroger’s shares fall another 1.85% to breach the average breakeven price of $19.55. The lower-strike put purchasers are prepared to profit if shares of the underlying stock drop 5.5% to trade below the breakeven point to the downside at $18.82 by expiration. In contrast to bearish put buying, investors with a rosier outlook purchased call options. Optimistic individuals picked up 3,500 calls at the June $20 strike for an average premium of $0.61 each, thus positioning for KR’s shares to exceed $20.61 by June expiration. Uber-bulls hoping for a sharp rally in Kroger’s share price purchased 1,000 calls at the higher June $22 strike for just $0.05 per contract. Shares must rise at least 10.7% to surpass the breakeven point on the June $22 strike calls at $22.05.
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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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