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Options Activity Pops As Express Shares Tumble

 

Today’s tickers: EXPR, DV & SA

EXPR - Express, Inc. – Shares in apparel retailer, Express, Inc., dropped nearly 30.0% today to a new 52-week low of $16.38 after the company projected full-year earnings below those expected by analysts. Options on EXPR are far more active than usual today, with overall volume on the stock currently at 4,460 lots, up nearly 2,000% over the stock’s 90-day average volume of 227 contracts. The June $17.5 strike call saw most of the action as traders exchanged some 2,365 of the contracts versus zero open positions in the first half of the session. A slight majority of the calls were purchased for an average premium of $0.78 apiece, suggesting some traders are positioning for shares in the name to rebound somewhat in the near term. Call buyers stand ready to profit at expiration next month in the event that EXPR shares rally 5.7% over the current price of $17.30 to top the average breakeven point at $18.28. On the flip side, June $17.5 strike put buyers anticipate shares in the name could go lower from here. Around 340 of the $17.5 puts were purchased this morning for an average premium of $0.88 each. Finally, some traders that initiated bearish strategies on Express prior to the earnings report saw the value of their positions appreciate big-time today. Buyers of around 720 of the June $22.5 strike put last Thursday paid an average premium of $1.18 per contract. Today those put options are trading at more than four times the average purchase price given the last-traded price of $5.20 each as of 12:45 p.m. ET.

DV - DeVry, Inc. – The for-profit education provider’s shares could hit their lowest price in more than five years in the next few weeks by the looks of bearish options trades initiated on the stock this morning. Shares in DeVry, Inc., which have dropped nearly 60.0% since last summer, are down 2.2% on the day at $28.21 as of 12:50 p.m. in New York. One or more traders appear to have purchased 2,915 puts at the June $25 strike for an average premium of $0.25 apiece at the start of the session. Long $25 strike puts may be profitable at expiration next month should DV shares decline another 12.3% to breach the average breakeven price of $24.75. Shares in the name last traded below $24.75 in 2006.

SA - Seabridge Gold, Inc. – Notable volume is building in Seabridge Gold, Inc. call options today, with shares in the Toronto, Ontario-based company climbing 7.3% to $13.28 in early-afternoon trading. Options on Seabridge, which acquires and explores gold properties in North America, have traded more than 22,000 times so far today and are nearly all changing hands in the January 2013 expiry. The Jan. 2013 $15 strike call is most active, trading upwards of 18,900 times against open interest of 338 open positions. It looks like most of these calls were purchased for an average premium of $1.65 apiece. Call buyers profit at expiration next year should the price of the underlying gain another 25.4% to surpass the average breakeven point at $16.65.

 

Caitlin Duffy

Equity Options Analyst


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