IB Options Brief: Staples, Inc. (SPLS)

Posted February 28th, 2012 by Caitlin Duffy in Unusual Activity

SPLS ñ Staples, Inc.
Shares in the office supplies retailer rallied 4.7% to $15.95 in sympathy with competitor, Office Depot, Inc., which opened sharply higher on better-than-expected fourth-quarter earnings released ahead of the opening bell this morning. Staples is scheduled to reveal its fourth-quarter performance before U.S. markets open on Wednesday, and it looks like options traders are positioning for the upward move in the shares to continue.

Front month calls are most active at the Mar. $16 strike, where it appears 2,400 contracts were purchased for an average premium of $0.44 each. Fresh interest in the April $17 strike calls was largely generated by buyers snapping up some 920 contracts at a premium of $0.25 apiece. Investors long the $17 strike calls profit at expiration if shares in Staples surge 8.2% to settle above the effective breakeven price of $17.25.

Longer-dated positioning also appears to be the work of traders eyeing upside potential in the retail chain. June $17 and $18 strike calls were purchased around 2,100 and 1,200 times for average premiums of $0.51 and $0.25 per contract, respectively, within minutes of the opening bell today. More than 16,000 contracts have changed hands on Staples this morning, with roughly three calls in play on the stock to each single put option.

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