Today’s tickers: ZLC, GCI & CHS
ZLC – Zale Corporation – Shares in jewelry retailer, Zale Corp., are soaring today, rallying as much as 23.6% during morning trading to touch a new four-year high of $11.08 after the company posted a narrower than expected fourth-quarter loss and its highest full year net income in six years ahead of the opening bell. Some options traders looking for the stock to rise after earnings initiated bullish trades on Zale two weeks prior to the report. Traders snapped up ZLC call options back on August 14th, for example, purchasing around 500 of the Sep $10 calls for an average premium of $0.86 apiece. The value of these calls has since increased substantially, with the asking premium up at $1.35 each as of 12:30 p.m. ET. Options traders also picked up the Sep $12.5 strike and the Nov $12.5 strike calls back on August 14th at premiums of $0.35 and $0.60 per contract, respectively. Today, it looks like traders are adding to bullish interest on the jeweler. More than 900 of the Nov $12.5 strike calls changed hands during morning trading versus open interest of 640 contracts, and it looks like most of the call options were purchased at a premium of $0.80 each. Buyers of the $12.5 strike calls stand ready to profit at November expiration should shares in ZLC rally 20% over today’s high of $11.08 to top the breakeven price of $13.30.
GCI – Gannett Co. Inc. – Trading in Gannet Co. put options today suggests one strategist is bracing for shares in the media company to potentially pull back in the near term. Shares in GCI, up more than 60% since this time last year, are roughly flat today to stand at $24.36 as of midday in New York. Shares in GCI are down roughly 10% since June 13th when the stock soared to a 52-week high of $26.99 on news it would acquire television company, Belo Corporation. Activity in the October expiry puts this morning indicates one trader is prepared for shares in Gannett to decline further during the next seven weeks. Upwards of 3,000 Oct $23 puts changed hands during the first hour of the session against open interest of 880 contracts, with most of the volume purchased at a premium of $0.80 each. The position may be profitable at expiration in October if shares in Gannett decline 9.0% from the current price of $24.36 to trade below the breakeven point at $22.20.
CHS – Chico’s FAS, Inc. – Shares in clothing and accessories retailer, Chico’s, are on the rise today, up 6.65% at $16.35 as of 12:15 p.m. ET following the company’s second-quarter earnings release and conference call. The company posted net income and sales for the quarter that missed analyst estimates. November expiry call options changing hands on Chico’s during the first 15 minutes of the trading session suggests one or more traders are positioning for shares in the retailer to extend gains during the next few months. The Nov $19 strike calls attracted the most volume, with one strategist purchasing more than 600 contracts at a premium of $0.20 each. The call buyer may profit at November expiration should shares in CHS surge 17% to exceed the effective breakeven price of $19.20. The Nov $18 calls are also active today, with roughly 250 lots purchased in the early going at a premium of $0.35 each. These contracts make money at November expiration if shares in the retailer gain 12% to settle above $18.35.
Caitlin Duffy
Equity Options Analyst
