DFS – Discover Financial Services – Bulls bombarded Discover Financial Services’ options today with shares of the credit card issuer and electronic payments services firm up 6.75% to $13.42 just before 12:30 pm (ET). Call buyers on the scene picked up 1,400 now in-the-money contracts at the June $13 strike for an average premium of $0.46 apiece. Investors long the calls are positioned to profit should shares of the underlying stock exceed the average breakeven point to the upside at $13.46 by expiration day. Traders acting early enough to secure the $0.46 asking price on the June $13 strike calls should be pleased given the subsequent jump in premium on the same options this afternoon, which now tote an asking price of $0.80 each. Other bullish traders picked up 1,000 calls at the higher July $15 strike for an average premium of $0.20 per contract. Investors holding the July $15 strike call options make money only if Discover Financial Services’ share price jumps 13.25% to surpass the effective breakeven price of $15.20 ahead of July expiration.
Affiliation: Interactive Brokers
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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