Today’s tickers: SKS, HLF & ABFS
SKS – Saks, Inc. – High-end retailer, Saks, Inc., popped up on our ‘hot by options volume’ market scanner this morning on heavier than usual trading traffic in upside calls. Shares in Saks are up 10% on Tuesday morning at a new 52-week high of $13.54 after the company posted first-quarter earnings in line with analyst expectations on higher-than-expected quarterly revenue. Shares in Saks are up more than 30% since this time last year. Bullish positions initiated in SKS options ahead of the earnings release yesterday are seeing sizable overnight gains today as shares push to the highest levels since June of 2008. Traders yesterday picked up around 500 out-of-the-money calls at the Jun $13 strike for an average premium of $0.22 per contract. Today, the $13 calls are in the money and changing hands at $0.65 each, a near three-fold increase compared to the premium paid yesterday, as of 11:50 a.m. ET. Traders appear to be buying up the $13 calls against today, with more than 1,500 lots in play versus open interest of 887 contracts. Overall options volume on Saks is nearing 9,000 contracts as of the time of this writing, which is roughly four times the stock’s average daily level of around 1,900 contracts.
HLF – Herbalife, Ltd. – Shares in Herbalife have resumed trading this afternoon, currently up 3.0% at $50.69 as of 12:20 p.m. ET, after earlier being halted with news pending. The company announced today it has hired PricewaterhouseCoopers as its independent public accountant to replace KPMG. The stock was moving higher ahead of the halt in HLF shares today, rising as much as 7.0% in the early going to $52.84. Traders looking for the stock to potentially rise to fresh 52-week highs during the next few trading sessions purchased weekly calls on the stock, buying around 1,100 lots at the May $57.5 strike for an average premium of $0.77 each. Traders long the contracts stand ready to profit at expiration this week should shares in Herbalife increase 10% over today’s high of $52.84 to exceed the average breakeven point at $58.27. Trading in calls on HLF is outpacing that of puts, with the call/put ratio hovering near 2.9 as of 12:30 p.m. in New York.
ABFS – Arkansas Best Corp – Call options on freight transportation services provider, Arkansas Best Corp, are active today, with shares in in the name rising more than 6.0% to a fresh 52-week high of $18.83. Shares in ABFS have increased more than 90% during the past three weeks. Traders positioning for further upside in the price of the underlying snapped up roughly 1,500 calls at the Jul $20 strike for an average premium of $1.18 per contract. Call buyers make money if shares in ABFS rally another 12.5% over today’s high of $18.83 to top the average breakeven price of $21.18 by July expiration. Shares in Arkansas Best last traded above $21.18 back in January of 2012.
Caitlin Duffy
Equity Options Analyst
