Stock Options Watch: PAY, CAB, GPRE

PAY – VeriFone Systems, Inc. – Shares in the mobile payments solutions provider rallied sharply on Tuesday, rising 8.4% to an intraday high of $22.18, after the company’s CEO, Douglas Bergeron, stepped down. VeriFone, which was raised to ‘Positive’ from ‘Neutral’ with a target price of $25.00 at Susquehanna today, currently trades up 5.8% on the session at $21.65 as of 12:30 p.m. ET. Options traders positioning for shares in the name to extend gains in the near term snapped up April expiry calls this morning. The April $23 strike calls attracted the most volume, with upwards of 3,200 lots in play versus open interest of 811 contracts, as of the time of this writing. Traders appear to have purchased most of the volume for an average premium of $0.69 apiece, and may profit at expiration next month should VeriFone’s shares rally another 6.8% over today’s high of $22.18 to top the average breakeven point at $23.69. VeriFone Systems shares are down roughly 60% since this time last year.

CAB – Cabela’s, Inc. – Upside call options on Cabela’s are active today, with shares in the retailer of hunting and camping gear rising nearly 13% to touch a new all-time high of $60.81 after the company’s forecast of first-quarter profits topped the average analyst projection. Traders positioning for shares in CAB to extend gains in the near term, and following the company’s analyst day tomorrow, picked up March and April expiry calls on the name. Bulls purchased more than 760 in-the-money calls at the Mar. $60 strike for an average premium of $0.59 apiece during the first half of the trading day. Meanwhile, like-minded strategists exchanged more than 700 calls at the April $60 strike versus open interest of 58 contracts. Traders buying the contracts in the early going appear to have paid an average premium of $1.91 per contract for the April $60 strike calls, and may profit if shares in Cabela’s rally another 1.8% to top the average breakeven point at $61.91.

GPRE – Green Plains Renewable Energy, Inc. – Shares in ethanol producer, Green Plains Renewable Energy, Inc., are trading higher on Tuesday afternoon, up 6.0% at a new 52-week high of $12.10 as of 12:50 p.m. ET. Trading traffic in June expiry call options on GPRE today suggests some traders are prepared for the price of the underlying to rally to the highest level since October 2010 during the next few months. One or more traders appear to have purchased roughly 1,000 calls at the June $12.5 strike for an average premium of $1.07 per contract. Bullish bets on Green Plains may pay off at June expiration should shares in the name jump 12% to surpass the breakeven point on the upside at $13.57. Options volume on GPRE is up sharply today, with roughly 1,500 contracts in play as of 1:00 p.m. ET, versus the stock’s average daily volume of roughly 60 contracts. Shares in Green Plains have more than doubled during the past six months, up better than 110% since September of 2012.

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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