IB Options Brief: TJX Companies, Inc. (TJX) & Electronic Arts, Inc. (EA)

Posted April 2nd, 2012 by Caitlin Duffy in Unusual Activity

TJX ñ TJX Companies, Inc.
Shares in the off-price retail chain operator kicked off the trading week in rally-mode, trading up 0.70% at the open to a new record high of $39.99, but reversed earlier gains to stand 0.20% lower on the day as of 11:20 a.m. in New York. The most active options on TJX Companies suggest at least one strategist is positioning for fresh all-time highs in the price of the underlying in the near term, while other traders may not be assuming as optimistic a stance on the name.

It looks like one bullish player purchased 3,000 calls at the May $42.5 strike for an average premium of $0.33 apiece. Profits are available to the investor in the event that TJXís shares surge 7.1% to surpass the average breakeven price of $42.83 by May expiration. The operator of T.J. MAXX, Marshalls Group and HomeGoods reports first quarter earnings on May 15th ahead of the opening bell.

Finally, traders snapping up July expiry put options this morning may be long the stock and protecting their gains. Alternatively, put buyers could be taking an outright bearish stance on TJX, positioning for an 8.9% pullback below the breakeven price on the downside at $36.44 by expiration.

EA ñ Electronic Arts, Inc.
Options trades betting that shares in Electronic Arts may post double-digit gains in the next seven weeks appear to be accumulating in the May expiry. Shares in the video game software and content provider are up 0.70% at $16.60 as of 11:50 a.m. on the East Coast.

It looks like one trader this morning purchased a roughly 2,500-lot May $16/$19 call spread for an average net premium of $0.98 per contract. The call spread prepares the investor to profit should shares in Electronic Arts rally another 2.3% to top the average breakeven price of $16.98 by expiration next month.

Open interest in the May $16 and $19 strike calls suggests an 815-lot call spread was purchased this past Thursday at a net premium outlay of $0.98 apiece. The buyer or buyers responsible for the $16/$19 call spreads may walk away with maximum possible profits of $2.02 per contract if shares in EA surge 14.5% to trade above $19.00 at expiration.

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