IB Options Brief: Skullcandy, Inc. (SKUL)

Posted April 26th, 2012 by Caitlin Duffy in Unusual Activity

Bullish Bets On The Rise In Skullcandy Call Options

SKUL ñ Skullcandy, Inc.
Bullish activity in Skullcandy call options this morning indicates shares in the maker of headphones and electronics accessories may rally in the near term. The stock had been on a tear, climbing more than 40.0% in the first four months of the year to touch a year-to-date high of $17.76 last Monday.

Shares have since surrendered 12.0% of their value to trade at the current price of $15.60, but options players accumulating calls in the front month appear to be positioning for a rebound. Skullcandy reports first-quarter earnings after the final bell on May 2nd.

The May $17.5 strike calls saw the most action, with more than 2,800 contracts changing hands in the first half of the session against open interest of 1,386 positions. It looks like the single largest trade in Skullcandy today was the purchase of a block of 1,744 $17.5 strike calls for a premium of $0.45 each. The trader holding the position stands prepared to profit at expiration in the event that SKUL shares surge 15.0% to top the effective breakeven price of $17.95.

Call buying today follows similar bullish trading traffic in the contracts yesterday. Open interest in the May $15 and $17.5 strike calls suggests one or more traders purchased more than 500 lots at each strike on Wednesday.

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