IB Options Brief: Mattress Firm, Inc. (MFRM) & Suncor Energy, Inc. (SU)

Posted June 6th, 2012 by Caitlin Duffy in Unusual Activity

MFRM ñ Mattress Firm, Inc.
Bullish bets in Mattress Firm options cropped up today despite the near 25.0% post-earnings plunge in shares of the mattress retailer to an intraday low of $26.70. Shares in Mattress Firm dropped on lower-than-anticipated first-quarter revenue and a reduced sales forecast for the second quarter, but some traders appear to be positioning for MFRMís shares to recoup losses during the second half of the year.

Near-term bulls picked up around 120 calls at the June $30 strike for an average premium of $1.11 apiece, while longer-dated Oct. $30 strike calls were purchased some 150 times at an average premium of $3.38 each. Call buyers in the front month stand ready to profit should the stock rebound above the average breakeven price of $31.11 by expiration next week. Traders long the Oct. $30 strike call make money if Mattress Firmís shares rally 13.7% over the current price of $29.36 to exceed $33.38 by October expiration.

MFRM shareholders are hurting today, but not quite as much as investors in luxury mattress provider, Tempur-Pedic (TPX). TPX shares halved in value after the company lowered its full-year earnings and sales forecasts. The company is scheduled to report second-quarter results after the final bell on July 26th.

SU ñ Suncor Energy, Inc.
Near-term bullish positioning in Suncor Energy, Inc. options is on the rise today, with shares in the Calgary, Alberta-based energy company up better than 3.8% at $28.32 as of 12:00 p.m. ET. Options on Suncor are most active at the Jun. $29 strike where more than 9,400 calls changed hands against open interest of 3,993 contracts.

It looks like the majority of the calls were purchased for an average premium of $0.35 apiece this morning, thus positioning buyers to profit should SUís shares extend gains in the near term. Traders long the calls make money should shares rally another 3.6% to surpass the average breakeven price of $29.35 by June expiration.

Strategists snapping up calls at the Jun. $29 strike on Tuesday paid an average premium of $0.19 apiece for approximately 1,400 of the contracts. The value of those positions has more than doubled overnight, with premium on the calls up at $0.48 each as of midday in New York.

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