Options Intelligence Report: Potash Corporation of Saskatchewan, Inc. (POT), Lennar Corp. (LEN) & Red Robin Gourmet Burgers Inc. (RRGB)
POT ñ Potash Corporation of Saskatchewan, Inc.
Shares of the fertilizer and feed products firm are down 3.10% to $108.74 this morning after analysts at Goldman Sachs Group slashed their rating on POT to ëneutralí, removing the stock from their Conviction Buy List, and lowered their 12-month target share price on Potash to $123.69 from $131.00.
One long-term bearish options player reacted to the ratings downgrade on the potash producer by purchasing put options in the September contract. The investor picked up 4,700 puts at the September $100 strike for an average premium of $6.60 apiece. POTís share price must plummet 14.1% from the current price of $108.74 in order for the pessimistic player to make money beneath the effective breakeven share price of $93.40. Potash Corp.ís shares last traded below $93.40 back on November 3, 2009, when the stock reached an intraday low of $90.46.
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LEN ñ Lennar Corp.
Call options on the homebuilding company are in high demand this morning with shares of Lennar Corp. trading higher by 4.75% to $18.10 as of 10:45 am (ET). Near-term bullish investors coveted 4,200 now in-the-money call contracts at the April $18 strike for an average premium of $0.20 apiece. Optimistic individuals long the calls stand prepared to profit if Lennarís shares rally through the average breakeven share price of $18.20 ahead of expiration day on Friday.
Bullish sentiment spread to the higher May $19 strike where 2,900 call options were picked up for an average premium of $0.45 per contract. Lennarís shares must increase at least 7.45% over the current value of $18.10 in order for investors to make money above the average breakeven share price of $19.45.
Finally, uber-bullish individuals purchased 1,300 calls at the May $20 strike for an average premium of $0.25 each. Investors long the May $20 strike calls profit if the homebuilding firmís shares rally 11.9% to exceed the breakeven point on the calls at $20.25 by May expiration day. The surge in demand for call options on Lennar Corp. boosted the stockís overall reading of options implied volatility 9.8% to 45.89% in the early hours of the trading session.
RRGB ñ Red Robin Gourmet Burgers Inc.
An upgrade to ëbuyí from ësellí with a 12-month target share price of $33.00 at Sterne, Agee & Lynch this week perhaps helped boost the price per share of the casual dining restaurant chain 4.6% this morning to an intraday high of $28.48. Bullish investors skipped the all-you-can-eat steak fries this morning and went straight for call options in the June contract.
Optimistic options players seized some 7,000 calls at the June $30 strike for a premium of $1.10 apiece. It looks like one trader may be banking profits by selling 2,000 in-the-money calls at the June $25 strike for an average premium of $3.55 each in order to purchase the higher June $30 strike call options.
Rolling up to a higher strike price in this case positions the investor to profit should RRGB experience continued bullish movement in the price of its underlying shares through June expiration. Options implied volatility on the gourmet burger maker is up 5.4% to 40.22% as of 11:10 am (ET).
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