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Vodafone Weeklys Generate Big Profits For Some Traders As Shares Soar

Today’s tickers: VOD, TFM & WSM

VOD – Vodafone Group Plc – Short term bullish positions initiated on Vodafone last week are generating substantial gains for some options traders today, with shares in the name up as much as 9.2% today to $32.12 after the U.K. carrier confirmed it is in talks to sell its 45% stake in Verizon Wireless to Verizon Communications Inc. Buyers of VOD weekly call options last Thursday saw a big jump in the value of their contracts overnight. Open interest in contracts that expire at the end of this week is greatest in the Aug 30 ’13 $29.5 and $30 calls, with 344 and 353 open contracts, respectively. A review of time and sales data in the $29.5 strike calls indicates one strategist purchased more than 300 contracts on August 22nd for a premium of $0.50 each. The jump in Vodafone’s shares today has roughly quadrupled the value of the $29.5 strike calls versus this time last week to $2.40 per contract as of 11:45 a.m. ET. Similarly, time and sales data suggests most of the Aug 30 ’13 $30 calls were purchased last Friday at a premium of $0.35 per contract. Premium required to purchase the $30 calls today has more than tripled in value to $1.90 each as of the time of this writing. Overall options volume on Vodafone is running well above the average daily level this morning, with 32,400 contracts traded thus far in the session versus an average of 8,900 options. Trading in VOD calls is outpacing that of puts, with the call/put ratio hovering around 3.2 as of 11:45 a.m. in New York.

TFM – Fresh Market, Inc. – Shares in Fresh Market fell as much as 10% today to $48.80, the lowest level since July 3rd, after the company posted lower than expected second-quarter revenue after the close on Wednesday. The stock is still up roughly 35% over its 52-week low of $36.00 reached back in March, but trades down 15% versus this time last year. Options traders bracing for shares in Fresh Market to continue lower during the next few weeks appear to buying the Sep $45 strike puts today. Upwards of 580 of the $45 puts traded this morning versus open interest of 481 contracts, and it looks like most of the volume was purchased for an average premium of $0.45 apiece. Put buyers stand ready to profit at expiration next month in the event that TFM shares decline another 9.0% to breach the average breakeven price of $44.55. Shares in Fresh Market last traded below $44.55 in May.

WSM – Williams-Sonoma Co. – Options activity on retailer Williams-Sonoma on Thursday indicates one or more traders are positioning for shares in the name to potentially pull back to the lowest level in two months during the next few weeks. The stock declined as much as 8.0% from Wednesday’s opening print of $60.32 to as low as $55.51 in the premarket on Thursday after the company forecast full year earnings below average analyst estimates. WSM shares are well off their lows at present, down just 0.55% at $56.65 as of 12:25 p.m. in New York. The most actively traded options contracts by volume on Williams-Sonoma today are the Sep $55 strike puts, with around 2,500 lots traded versus open interest of 3,321 contracts. Time and sales data suggests most of the puts exchanged this morning were purchased for an average premium of $1.11 each. The bearish contracts make money at expiration next month in the event that WSM shares decline 5.0% from the current price of $56.65 to trade below the average breakeven point at $53.89. 

 

Caitlin Duffy
Equity Options Analyst


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