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Bullish Bets On Nike Payoff As Shares Hit Record Highs After Earnings

 

Today’s tickers: NKE, MDLZ & TIBX

NKE - Nike, Inc. – Weekly call options purchased on Nike yesterday ahead of the footwear and apparel maker’s better-than-expected third-quarter earnings report released after the closing bell on Thursday fetched big overnight profits for some traders, with shares in the name rallying to record highs, up better than 11.5% at $59.79 as of 12:40 p.m. in New York. The change in open interest in the Mar. 28 ’13 $55 strike calls yesterday indicates 3,062 opening positions were initiated. A review of time and sales data suggests most of the volume was purchased at an average premium of $0.84 apiece on Thursday. The sharp rally in NKE shares overnight now finds the premium required to purchase the $55 strike calls has jumped more than five-fold to $4.75 per contract as of the time of this writing. Options traders anticipating more room for the stock to run in the near term purchased more than 3,000 calls at the April $60 strike for an average premium of $0.87 each during the first half of the session. Call buyers may profit at expiration next month as long as shares in Nike top the average breakeven point at $60.87. Overall options volume on the stock is heavier than usual, with upwards of 52,250 contracts in play just before 1:00 p.m. ET, versus the stock’s average daily volume of around 12,000 contracts.

MDLZ - Mondelez International, Inc. – Shares in the world’s largest chocolatier, biscuit baker and candy maker are up sharply on Friday following a report in Britain’s Daily Telegraph said Nelson Peltz’s Trian Fund Management LP has been taking positions in both Mondelez International, Inc. and PepsiCo in recent weeks. The unconfirmed reports cited persons familiar with the matter, and managed to send shares in MDLZ up 4.9% to $29.96, the highest level since the spin-off from Kraft Foods, Inc., last year. Options traders who purchased upside calls on Mondelez yesterday are seeing big overnight gains in the value of their positions today. A review of time and sales data from Thursday’s trading session suggests bullish players purchased-to-open more than 2,000 calls at both the April $29 and $30 striking prices at average premiums of $0.23 and $0.07 apiece, respectively. The sharp move in the stock today has lifted premium on the $29 and $30 strike calls to $1.78 and $0.93 per contract as of the time of this writing. Traders appear to be adding to bullish positions on the provider of Chips Ahoy! cookies and Cadbury chocolate today, with upwards of 6,000 calls in play at the April $30 strike versus open interest of 5,980 contracts as of 11:30 a.m. ET. It looks like most of the $30 calls were purchased for an average premium of $0.23 apiece, thus positioning buyers to profit in the event that MDLZ shares top the average breakeven price of $30.23 by expiration next month. May $30 and $31 strike call options are changing hands on Mondelez today, as well.

TIBX - TIBCO Software, Inc. – U.S. stocks are rallying ahead of the weekend on strong earnings reports from the likes of Nike and Tiffany & Co., but TIBCO Software is bucking the trend, with shares in the provider of infrastructure software plunging more than 17% to $19.15 in the early going on Friday. The company yesterday reported lower-than-expected first-quarter revenue and forecast sales for the current quarter below average analyst estimates. Options traders wary of further declines in the price of the underlying snapped up April expiry puts, picking up around 550 lots at the April $19 strike for an average premium of $0.63 apiece during morning trading. Put buyers may profit if shares in TIBX decline 4% from today’s low of $19.15 to breach the effective breakeven point and fresh 52-week low of $18.37 by April expiration.

 

Caitlin Duffy
Equity Options Analyst


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