Options Brief: J.C. Penney

JCP – J.C. Penney Co., Inc. – Shares of the department store operator rallied as much as 7.9% in the first half of the trading day to secure an intraday high of $24.10 on news retail sales rose in August at the fastest pace in five months. It looks like some JCP bulls are banking gains by rolling previously established long call positions up to a higher strike price in the September contract. Investors exchanged approximately 9,000 calls at both the September $21 strike and the September $23 strike. The September $21 strike call options were likely originally purchased back on August 20 and September 13 for an average premium of $0.96 per contract. Today, the sharp rally in JCP’s shares, boosted premium on the now deep in-the-money calls, allowing traders to sell all 9,000-something contracts for an average premium of $2.44 apiece. Average net profits on the sale amount to $1.48 per contract. Next, it looks like the same traders rolled bullish sentiment up to the September $23 strike where about 9,000 in-the-money calls were purchased at an average premium of $0.96 each. Investors amass profits on the new position if JCP’s shares exceed the average breakeven price of $23.96 at expiration on Friday.

About Andrew Wilkinson 1023 Articles

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.

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.

Visit: Interactive Brokers

Be the first to comment

Leave a Reply

Your email address will not be published.