IB Options Brief: Ann, Inc. (ANN) & Roundy's Inc. (RNDY)

Posted April 3rd, 2012 by Caitlin Duffy in Unusual Activity

ANN ñ Ann, Inc.
The operator of Ann Taylor and LOFT brand stores popped up on our ëhot by options volumeí market scanner after a large spread was established in the June expiry calls. Shares in Ann, Inc. are trading up 1.2% at $29.13 in early-afternoon trade. The stock has had a tremendous run in the past two months, up 31.5% off the February 2nd year-to-date low of $22.14, and it looks like one options player is positioning for the shares to extend gains through June expiration.

The strategist appears to have purchased a 5,000-lot June $31/$34 call spread for an average premium of $0.75 per contract, thus positioning him or her to profit in the event that Annís shares rally another 9.0% to surpass the average breakeven price of $31.75. Maximum potential profits of $2.25 per contract are available on the spread as long as the apparel retailerís shares rise 16.7% to trade above $34.00 at June expiration.

The debit call spread comprising 10,000 option contracts is gargantuan next to the stockís 90-day average options volume of 577 contracts, and is sizable in comparison to ANNís overall open interest of 15,090 positions.

RNDY ñ Roundyís Inc.
Options on Midwest grocer Roundyís Inc. are active again today as shares in the operator of Pick ën Save and other retail grocery names extended gains to secure a new record intraday high of $12.00. Shares in Roundyís soared more than 10.0% at the open of trade on Monday after the stock was added to the Russell 2000 Index.

The single largest transaction in RNDY options today appears to be a vote of confidence that the stock is unlikely to trade in the single-digits again anytime soon. It looks like one trader sold 2,000 puts at the Sept. $10 strike to pocket premium of $0.75 per contract.

The put seller walks away with the full amount of premium in hand as long as shares in Roundyís exceed $10.00 at expiration. The trader risks having 200,000 shares of the underlying put to him at an effective price of $9.75 each, however, should the price of the underlying drop 14.6% from the current price of $11.71 to settle below $10.00 at expiration in September.

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