IB Options Brief: P.F. Chang's China Bistro, Inc. (PFCB)

Posted May 1st, 2012 by Caitlin Duffy in Unusual Activity

Good Fortune For Buyers Of Calls Ahead Of P.F. Changís/Centerbridge Deal

PFCB ñ P.F. Changís China Bistro, Inc.
Shares in Asian-themed restaurant operator, P.F. Changís China Bistro, jumped 30.0% to $51.56 today after Centerbridge Partners LP agreed to take the Scottsdale, Arizona-based Company private in a deal valued at $1.09 billion, or $51.50 per share. The sharp move to the upside in shares of PFCB has some resulted in big gains for some traders sitting on bullish positions in the front month options.

A couple of weeks ago the May $45 strike call was purchased more than 2,000 times at a premium of $0.30 apiece. The stock closed April 16th at $39.50 such that buyers of the $45 strike calls required a 15.0% move up in the shares to breakeven above $45.30 by expiration. Instead, shares in P.F. Changís rallied more than 30.0% since the contracts were purchased, resulting in massive paper profits of $6.20 per contract given the calls currently display a last-traded price of $6.50 each.

The trader or traders long the $45 calls are still holding onto the contracts as of 11:45 a.m. in New York. P.F. Changís China Bistro, Inc. reported first-quarter earnings and revenue slightly below expectations prior to the opening bell this morning.

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