Options Intelligence Reports: Ann Taylor Stores Corp. (ANN) & Coca-Cola Co. (KO)
ANN ñ Ann Taylor Stores Corp.
Bullish options traders tried call options on for size at the retailer of womenís apparel, shoes and accessories today ahead of the firmís third quarter earnings report, which is scheduled for release ahead of the opening bell on Friday. Shares in Ann Taylor are currently up 6.55% at $24.11 as of 3:15 pm.
Almost all of the options action on the womenís clothing company today centered at the November $25 strike where 5,400 calls were purchased at a premium of $0.30 a-pop. Volume in November $25 strike calls is more than 10.3 times greater than the 521 contracts representing previously existing open interest at that strike.
Call buyers make money if the price of the underlying stock jumps 4.9% over the current price of $24.11 to exceed the effective breakeven point at $25.30 by expiration on Friday. Chicoís FAS Inc., another womenís apparel retailer, reported better-than-expected third quarter earnings this morning and helped lift ANNís shares during the current session.
KO ñ Coca-Cola Co.
One options strategist populating Coca-Cola Co. this afternoon foresees the beverage makerís shares trading within a specific range through May 2011 expiration. The investor appears to have sold a sizeable straddle on Coke today with shares currently trading higher by 0.85% at $62.60 as of 1:55 pm in New York.
The straddle player sold 5,170 in-the-money calls at the May 2011 $62.5 strike for a premium of $2.80 each and shed 5,170 puts at the same strike at a premium of $3.43 a-pop. Gross premium enjoyed by the straddle-seller amounts to $6.23 per contract for a total of $3,220,910. The investor keeps the full amount of premium received on the sale if the soda makerís shares settle at $62.50 at expiration. Profits erode should shares shift in either direction away from the central strike price going forward.
Short stances in both call and put options expose the trader to losses in the event that shares rally above the upper breakeven price of $68.73, or if shares slip beneath the lower breakeven point at $56.27, ahead of May expiration. Shares in Coca-Cola have not exceeded $63.32, the highest recorded price in its shares in nearly three years, since January of 2008, and have traded above $56.27 since September 2, 2010.
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