IB Options Brief: Red Robin Gourmet Burgers, Inc. (RRGB) & Rockwood Holdings, Inc. (ROC)
RRGB ñ Red Robin Gourmet Burgers, Inc.
It looks like traders that sold Red Robin call options ahead of the restaurant chain operatorís disappointing first-quarter earnings report can have their burger and eat it too as shares in the name take a sharp turn to the downside. Shares in Red Robin Gourmet Burgers are off their lows of the session, trading down 11.9% at present to stand at $31.50 as of 1:20 p.m. ET.
A review of open interest in the May $35 strike call, currently at 814 open positions, suggests some 478 of the contracts were sold at an average premium of $1.38 apiece between May 3rd and May 8th. With shares in the name taking a big hit today and with expiration on the horizon, itís no surprise to see these contracts are now almost worthless. The far out-of-the-money May $35 strike call is trading at a premium of $0.05 each this afternoon.
ROC ñ Rockwood Holdings, Inc.
Shares in the Princeton, New Jersey-based chemical maker are down 5.4% at $46.25 this afternoon, but options in play on Rockwood Holdings, Inc. today suggest there could be a rebound in the shares in the next four weeks. A 500-lot June $50/$55 call spread, purchased at an average net premium of $1.10 per contract, may be a profitable strategy if Rockwoodís shares rally 10.5% to top the average breakeven price of $51.10.
Maximum potential profits of $3.90 are available on the transaction in the event that ROC shares soar 18.9% to exceed $55.00 at June expiration. Rockwood is scheduled to have its shareholder meeting tomorrow and will present at the Goldman Sachs Basic Materials Conference in 2012 on May 23rd.
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