JCP – J.C. Penney Co., Inc. – Shares of the third-largest department store chain in the U.S. surged 7.1% today to secure an intraday high of $33.88 on news Pershing Square Capital Management LP, a New York hedge-fund firm run by William Ackman, disclosed a 16.5% stake in the retailer. JCP’s shares rallied yesterday as well after the department store operator said same-store sales increased 5.1% last month. Investors made a beeline for JCP options right out of the gate this morning. Optimistic traders looking for shares to climb higher ahead of January 2011 expiration initiated three-legged bullish spreads. Investors purchased roughly 4,000 in-the-money calls at the January 2011 $30 strike for an average premium of $5.29 each, sold about the same number of calls at the higher January 2011 $40 strike for a premium of $0.96 apiece, and sold 4,000 puts at the January 2011 $28 strike at an average premium of $1.31 a-pop. The net cost of the three-legged transaction amounts to an average of $3.02 per contract. Thus, bullish players employing this strategy make money if the retailer’s shares exceed the average breakeven price of $33.02 through expiration day next year. Maximum potential profits of $6.98 per contract are available to these traders should the price of the underlying stock jump 18.05% over today’s high of $33.88 to trade above $40.00 by January expiration. Finally, a number of investors purchased put spreads in the November contract, perhaps to lock in the rally in the retailer’s shares. One such put player appears to have purchased a 2,500-lot November $33/$30 put spread at an average premium of $1.30 per contract. The transaction yields downside protection beneath a breakeven share price of $31.70 through November expiration. Options traders exchanged approximately 84,000 contracts on JCP by 12:12 pm ET.