IB Options Brief: Qiao Xing Universal Resources, Inc. (XING) & Dollar Tree Stores, Inc. (DLTR)
XING ñ Qiao Xing Universal Resources, Inc.
The Chinese resources company attracted near-term bullish options traders to the front month this morning with its shares rising as much as 13.0% earlier in the session to secure an intraday high of $2.34. Investors expecting XINGís shares to rise ahead of expiration day next month scooped up around 1,520 calls at the April $2.5 strike for an average premium of $0.12 per contract.
Call buyers stand prepared to profit in the event that shares in Qiao Xing Universal Resources jump 12.0% over todayís high of $2.34 to surpass the average breakeven price of $2.62 before the calls expire next month. More than 2,600 calls traded at the April $2.5 strike thus far today on open interest of 1,164 contracts.
Call options were also active out at the June $2.5 strike where some 672 lots changed hands in the first half of the session. Open interest in these longer-dated call options is relatively large at 6,823 contracts and is sufficient to cover volume generated there today. The rise in demand for call options on XING helped lift the overall reading of options implied volatility on the stock 25.5% to 85.93% by 12:45pm.
DLTR ñ Dollar Tree Stores, Inc.
Shares in the operator of discount variety stores are up 0.80% at $54.07 this afternoon, and some options traders appear to be prepping for the price of the underlying to continue to climb higher in the next couple of months.
Bullish players picked up around 1,000 in-the-money calls at the May $52.5 strike for a premium of $3.30 each this morning. Investors long the calls profit if Dollar Treeís shares increase another 3.2% over the current price of $54.07 to surpass the effective breakeven point to the upside at $55.80 by May expiration day.
Demand for DLTR calls spread to the higher May $57.5 strike where some 1,900 calls were picked up at an average premium of $1.17 apiece. Some portion of the contracts purchased at the May $57.5 strike may have been tied to activity in the underlying shares, or to call selling out at the August $57.5 strike.
More than 5,450 option contracts have changed hands on Dollar Tree Stores thus far today, with the overwhelming majority of the volume driven by activity in calls. Buyers of the calls benefit from continued bullish movement in DLTRís shares through expiration.
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