BIG – Big Lots, Inc. – Options volume on broadline closeout retailer Big Lots is roughly 2.5 times the average daily level for the stock, with roughly 7,200 contracts traded as of 11:15 a.m. EST versus the average 2,800 contracts that trade on BIG per day. The most actively traded contracts on Big Lots this morning indicate some traders may be positioning for shares in the name to rally substantially at the start of the New Year.
The Jan ’14 $32.5 strike calls have traded more than 6,500 times against open interest of just 813 contracts. Time and sales data suggests much of the volume was purchased in the early going for an average premium of $0.60 apiece. Buyers of the $32.5 strike calls stand ready to profit at expiration next month should shares in Big Lots rally more than 6.0% over the current price of $31.14 to exceed the breakeven point at $33.10. Shares in BIG fell sharply earlier in the month after the company posted a wider-than-expected third-quarter loss and lowered its full-year earnings forecast; shares in the name are down more than 15% since the December 5th earnings report.
GM – General Motors Co. – Shares in GM rallied during the first hour of the session, briefly trading up to a fresh record high of $41.85 before retreating into negative territory. The stock is currently down 0.50% on the day at $41.22 just before 11:00 a.m. EST.
Among GM options contracts set to expire at the end of this week, the 20 Dec ’13 $40.5 strike puts attracted the most volume near the open. Upwards of 3,500 of the $40.5 strike puts changed hands against open interest of 1,778 contracts, with most of the volume purchased at a premium of $0.15 each at around the same time that the price of GM shares were pushing toward the highest level of the day. The subsequent dip in the price of the underlying this morning has nearly doubled the asking premium on the $40.5 strike weekly puts to $0.28 each as of the time of this writing.
The 20 Dec ‘13 $40.5 puts may be profitable at expiration this week if shares in General Motors slip 2.1% from the current level to trade below the breakeven point at $40.35.
