NDLS – Noodles & Company – Shares in restaurant operator Noodles & Co. rallied nearly 9.0% today to $49.45, the highest level since July 3rd, but options changing hands on the stock during the first half of the trading session suggest some traders are bracing for the price of the underlying to potentially pullback during the next couple of months. The stock is well off its highs of the session as of midday, with shares trading at $46.68 as of the time of this writing.
Traders appear to be buying the Nov $45 strike puts, with roughly 1,950 contracts traded against open interest of 103 contracts. It looks like most of the puts were purchased for an average premium of $2.90 each. The puts may be profitable at November expiration if shares in Noodles & Co. drop 10% from the current price of $46.68 to breach the average breakeven point on the downside at $42.10. Shares in Noodles last traded below $42.10 at the end of August.
SFM – Sprouts Farmers Market, Inc. – Traders appear to be buying upside call options on Sprouts Farmers Market this morning, with shares in the name rising 6.9% in the early going to a record high of $44.75. Shares in Sprouts, publicly traded since August 1st, have increased more than 20% during the month of September.
The most traded options on Sprouts thus far today are the Oct $45 strike calls, with around 1,500 lots in play versus open interest of 179 contracts as of the time of this writing. Time and sales data indicates most of the $45 calls were purchased at a premium of $1.50 each, thus positioning buyers to profit in the event that SFM shares rally another 4.0% over today’s high of $44.75 to exceed the breakeven price of $46.50.
