Options Activity Alert: CZR, TUMI, SYY

CZR – Caesars Entertainment Corp. – The casino entertainment company and owner of the World Series of Poker® attracted heavier than usual options activity ahead of its second-quarter earnings report after the closing bell today. Shares in Caesars Entertainment Corp. are up 0.25% on the day at $8.34, but have fallen 45% from the stock’s February 7th closing high of $15.40, the same date of the company’s IPO. The purchase of 2,400 Aug. $7.5 strike put options in the first 15 minutes of the trading week suggests one trader is preparing for the price of the underlying to extend losses after earnings. The bearish position cost $0.35 per contract and makes money if shares in Caesars drop 14% from the current price to trade below a breakeven point and record low of $7.15 by August expiration.

TUMI – Tumi Holdings, Inc. – The retailer of high-end luggage, briefcases and bags is enjoying a 1.4% upside move in the price of its shares today to $18.20 ahead of its second-quarter earnings report after the final bell. Call buying initiated on the stock this morning suggests one or more options players are positioning for the price of the underlying to extend gains in the near term. Perhaps anticipating a pop in the shares after Tumi announces its quarterly results for the second time as a public company, traders exchanged more than 3,200 calls at the Aug. $20 strike against previously existing open interest of 136 contracts. It looks like most of the calls were purchased for an average premium of $0.63 apiece, thus positioning buyers to profit at expiration in the event TUMI shares surge 13% to top the average breakeven price of $20.63. Some luxury retail names, such as handbag maker, Coach, Inc., were slammed after recent top line misses. Shares in Coach fell more than 18% on July 31st after fourth-quarter revenue failed to meet analyst expectations. Tumi’s shares are currently down 37% off the April 19th IPO high of $28.70; disappointing quarterly results or full year guidance could see the luggage seller’s shares slide further to the downside rather than run higher as call buyers anticipate. Traders long the calls could lose the full amount of premium paid to establish bullish positions on the stock if the contracts expire worthless later this month.

SYY – Sysco Corp. – Put options on food distributor Sysco are active this morning ahead of the company’s fourth-quarter earnings report next Monday. Shares in the name are up 0.65% at $29.42 on the session, but heavy front-month put buying indicates some traders are positioning for a potential pullback in the price of the underlying. Volume in Sysco options is heaviest at the Aug. $28 strike where upwards of 7,200 puts changed hands against open interest of 3,187 contracts. It looks like most of the put options were purchased for an average premium of $0.20 apiece. Put buyers may profit at August expiration if shares in Sysco slide 5.5% post-earnings to breach the average breakeven point on the downside at $27.80. Shares in the food distributor last traded below $27.80 in the first full week of June.

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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