Options Activity Alert: GRPN, DLTR, CHS

GRPN – Groupon, Inc. – Shares in Groupon are up 11.11% at $11.00 today on expectations the company may report better-than-expected first-quarter earnings after the final bell. Options on the stock are quite active as well, but not all of the positioning is looking for a positive earnings surprise tonight. Fresh interest building in the June expiry puts portends potential fresh record lows for the shares in the near future. One-by-two June $7.0/$9.0 ratio put spreads purchased this morning position traders to profit from limited bearish movement in the price of the underlying during the next five weeks. Of the more than 3,300 put options in play at the June $7.0 and $9.0 strikes, the largest blocks of options changing hands are the purchase of 486 $9.0 strike puts spread against the sale of 972 $7.0 strike options, done at a net premium outlay of $0.33 per contract. The ratio spread may be a profitable strategy should Groupon’s shares drop 21.1% to slip beneath the effective breakeven point at $8.67. Maximum possible profits of $1.67 per contract are available on the positions if shares in the name drop 36.4% to settle at $7.00 at June expiration. Groupon’s shares on Friday traded down to an all-time low of $9.63.

DLTR – Dollar Tree Stores, Inc. – Bearish options are in play on Dollar Tree, Inc. this morning ahead of the discount consumer goods retailer’s first-quarter earnings report on Thursday. Shares in Dollar Tree are currently down 1.5% at $101.05 as of 12:50 in New York. It looks like the investor buying a sizable debit put spread on DLTR this morning paid an average net premium of $3.31 per contract for a roughly 3,000-lot June $85/$100 spread. The position makes money if shares in Dollar Tree fall 4.3% to breach the average breakeven price of $96.69, while maximum potential profits of $11.69 are available in the event that shares plunge 15.9% to settle below $85.00 at expiration next month.

CHS – Chico’s FAS, Inc. – Options on the retailer of casual women’s clothing and accessories attracted bullish plays on Monday morning as traders await the company’s first-quarter earnings report on Wednesday. Shares in Chico’s are bucking the broad market decline today, trading up 1.8% at $14.67 as of 12:30 pm ET. In-the-money call buyers in the May expiry are ready to profit should shares in the retailer extend gains ahead of expiration. It looks like one or more players snapped up 1,600 calls at the May $14 strike for an average premium of $0.90 apiece. Call buyers make money if shares in the name rally another 1.6% to top the breakeven price of $14.90. Shares in the apparel retailer touched a six-month high of $16.07 as recently as May 2nd.

About Caitlin Duffy 373 Articles

Affiliation: Interactive Brokers

Caitlin Duffy joined Interactive Brokers in 2009. In her role as Equity Options Analyst, Caitlin provides daily market commentary; highlighting various options trades, trading patterns and strategies of interest. Through Interactive Broker's webinar program, Ms. Duffy presents a number of educational, options-related events describing the theoretical pricing of options, the option Greeks as well as options strategies.

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