IB Options Brief: Coinstar, Inc. (CSTR)
Options In Focus At Coinstar As Shares Hit New Highs
CSTR ñ Coinstar, Inc.
Shares in the provider of coin-counting and Redbox self-service kiosks are bucking the trend today, surging as much as 13.7% during the session to hit a new all-time high of $69.74, after the Company raised its 2012 earnings forecast. The down-day for U.S. equities has taken some of the wind out of Coinstarís sails this afternoon, though the stock continues to trade 7.6% higher at $66.00 as of 12:25 p.m. on the East Coast.
Options on the kiosk provider are far more active than usual, with volume up above 16,000 contracts in early-afternoon trade, versus the stockís 90-day average volume of 2,012 contracts. Trading patterns are mixed, but there are some strategists positioning for the rally to continue next week.
Out-of-the-money calls in the front month attracted bullish bets, with more than 2,060 contracts changing hands at the April $70 strike against 1,720 open positions. The $72.5 strike calls expiring next week traded more than 540 times, with much of the volume initiated by buyers shelling out an average premium of $0.44 apiece this morning.
Traders long the $72.5 strike calls profit at expiration in the event that shares jump 10.5% to surpass the average breakeven price of $72.94. Barring that move, call buyers lose the full amount of premium paid if the options are out-of-the-money at April expiration.
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