Options Activity Alert: JEF, ANN, CBRL

JEF – Jefferies Group, Inc. – Put options are active on Jefferies today ahead of the company’s third-quarter earnings report prior to the opening bell on Thursday. Shares in the global securities and investment banking firm are currently hovering near their session low, down 1.6% to stand at $15.46 as of 12:20 p.m. ET. Jefferies popped up on our ‘hot by options volume’ market scanner this morning after at least one options player initiated a sizable near-term bearish stance on the stock. It looks like traders exchanged more than 5,400 puts at the Sep. $15 strike against previously existing open interest of 967 contracts. Most of the puts in play appear to have been purchased at a premium of $0.15 apiece, perhaps as some strategists prepare for the price of the underlying to extend losses this week. Traders may be taking an outright bearish stance on the stock, or could be securing downside protection to hedge a long position in JEF shares. Profits, or downside protection, kick in if shares in the financial services firm decline 4% from the current level to breach the breakeven price of $14.85 at expiration. Shares in Jefferies, which hit a six-month low of $11.59 in July, have since gained more than 30% to trade at their highest since the first week in May.

ANN – Ann, Inc.– Upside calls on women’s apparel and accessories retailer, Ann, Inc., attracted buyers positioning for shares in the name to rally through the end of the trading week. Interestingly, shares in ANN started the session flat-to-slightly negative on Wednesday before turning positive and rallying sharply. The move in the price of the underlying was accompanied by heavy front-month call buying. The stock is now up better than 2.4% on the session to stand at $38.40 as of 12:45 p.m. in New York. The bulk of the trading traffic in ANN options this morning is in the Sep. $38 strike where more than 3,600 in-the-money calls have changed hands versus open interest of 399 contracts. Time and sales on the trades indicates more than 3,500 of the call options were purchased just after 11:10 a.m. this morning for an average premium of $0.25 apiece. Less than two hours later the price tag on the $38 calls has tripled to $0.75 per contract.

CBRL – Cracker Barrel Old Country Store, Inc. – Shares in the operator of restaurants and gift shops in the U.S. jumped 9% to an all-time high of $69.30 this morning after the company reported fourth-quarter earnings and sales that handily beat analyst expectations. The sharp move to the upside in the shares today sparked heavier-than-usual trading traffic in CBRL options. It looks like some traders are positioning for shares in the name to extend gains in the near term. Strategists anticipating fresh record highs by this weekend snapped up more than 730 of the Sep. $70 strike call for an average premium of $1.50 apiece today. Buyers of the $70 calls may profit at expiration in the event Cracker Barrel’s shares add 3% to today’s high of $69.30 and settle above the average breakeven price of $71.50. Meanwhile, traders preparing for the stock to potentially stage a more impressive rally during the next four weeks looked to the Oct. $75 strike, purchasing around 145 of the contracts for an average premium of $0.17 apiece. The stock would need to gain 8.5% by October expiration in order for $75 strike call buyers to make money above the average breakeven price of $75.17.

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.

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.

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