ROST – Ross Stores, Inc. – Shares of the operator of off-price retail apparel and home accessories stores increased as much as 2.3% during the trading session to secure an intraday high of $56.12. Ross Stores appeared on our scanners due to near-term activity in call options. It looks like the majority of trading in October contract calls is the work of one investor booking profits and rolling a previously purchased chunk of calls to a higher strike price. The investor likely purchased approximately 4,000 in-the-money calls at the October $52.5 strike for an average premium of $2.48 each back on September 14 when shares were trading around $53.56. Ross Stores’ shares have since rallied 4.8% to today’s high of $56.12 and lifted premium on the now deep in-the-money October $52.5 strike call options. The trader sold roughly 4,000 calls at that strike today for a richer premium of $3.47 apiece. Average net profits on the sale amount to $0.99 per contract. Next, the trader extended bullish sentiment on the retailer by scooping up a fresh batch of 4,000 in-the-money calls at the higher October $55 strike for which he paid an average premium of $1.82 each. Profits on the new position start to accumulate if ROST’s shares exceed the average breakeven point to the upside at $56.82 by expiration day next month.
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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