IB Options Brief: Clean Harbors, Inc. (CLH) & Chico's FAS, Inc. (CHS)

---

CLH ñ Clean Harbors, Inc.
Pre-earnings report call buyers positioning for shares in Clean Harbors to rally following the release of the companyís second-quarter results this morning hit the jackpot. The provider of environmental, energy and industrial services around the globe posted far better-than-expected profits of $0.55 a share in the quarter, sending its shares up as much as 14.9% to a new all-time high of $59.35.

It looks like some traders speculating on a post-earnings pop in the price of the underlying purchased around 200 call options at the August $52.5 strike during the past three trading sessions for an average premium of $1.80 apiece. The huge move in CLHís shares today lifted premium on the Aug. $52.5 strike call up to $6.30 apiece. Call volume at the strike is running at 129 contracts against open interest of 234 contracts as of 12:15 pm ET, suggesting some or all of the positions are still being held by their owners.

Meanwhile, investors expecting shares in Clean Harbors to continue to rally in the near term purchased around 210 fresh calls up at the August $60 strike for an average premium of $0.95 each. Call buyers profit if shares in CLH rally another 2.7% over todayís high of $59.35 to surpass the average breakeven price of $60.95 at expiration. Options implied volatility on Clean Harbors fell post earnings to stand 17.4% lower on the session at 30.50% in early-afternoon trade.

 

CHS ñ Chicoís FAS, Inc.
Bearish bets initiated on specialty retailer Chicoís at the tail-end of June seem to be paying off for some patient strategists who held short calls while the value of Chicoís shares marched higher for the next four weeks until the stock finally reversed course at the end of July. Shares in the retailer of apparel and accessories peaked at a 52-week high of $16.50 on July 21. The stock has since fallen around 14.0%, providing call sellers the opportunity to close out positions at favorable prices.

Investors short Chicoís calls may have decided to take the money and run given the 2.0% rebound in CHS to $14.50 this morning. The retailer reports second-quarter earnings ahead of the opening bell on August 17.

Open interest patterns in the August $15 strike call suggest traders sold around 2,000 calls for an average premium of $1.03 apiece on June 24. With theta and the eventual pullback in the price of the underlying on their side, it looks as though call sellers were able to buy back some 1,950 calls at the August $15 strike today for an average premium of $0.42 apiece.  Net profits on the transaction amount to an average premium of $0.61 per contract.

Similar short interest in the August $16 strike call has, on paper, resulted in substantial gains for traders who sold approximately 2,400 calls for an average premium of $0.74 each in the first week of July. The August $16 strike call currently touts an asking price of $0.20 per contract.

Itís certainly worth noting that buyers of the Aug. $15 strike call this morning are not necessarily closing out short interest. Investors could be initiating fresh bullish positions on the specialty retailer ahead of earnings. In either case, the trade is a sign of optimism on CHS whether strategists are closing out bearish positions or establishing outright bullish ones. The change in open interest tomorrow should indicate which scenario is being played out today.


---------------------------------------------------------------------------------------

Note: The material presented in this commentary is provided forinformational purposes only and is based upon information that isconsidered to be reliable. However, neither Interactive Brokers LLC norits affiliates warrant its completeness, accuracy or adequacy and itshould not be relied upon as such. Neither IB nor its affiliates areresponsible for any errors or omissions or for results obtained from theuse of this information. Past performance is not necessarily indicativeof future results.

This material is not intended as an offer or solicitation for thepurchase or sale of any security or other financial instrument.Securities or other financial instruments mentioned in this material arenot suitable for all investors. Any opinions expressed herein are givenin good faith, are subject to change without notice, and are onlycorrect as of the stated date of their issue. The information containedherein does not constitute advice on the tax consequences of making anyparticular investment decision. This material does not take into accountyour particular investment objectives, financial situations or needsand is not intended as a recommendation to you of any particularsecurities, financial instruments or strategies. Before investing, youshould consider whether it is suitable for your particular circumstancesand, as necessary, seek professional advice.

---

View Andrew Wilkinson's post archive >