IB Options Brief: Vera Bradley, Inc. (VRA) & Chipotle Mexican Grill, Inc. (CMG)

Posted April 20th, 2012 by Caitlin Duffy in Unusual Activity

VRA ñ Vera Bradley, Inc.
Shares in the maker of quilted handbags and accessories, down nearly 50.0% off the 2011 52-week high of $52.36, may continue to unravel this summer by the looks of bearish put buying in the August expiry today. The stock is down 1.5% this afternoon to stand at $27.20 as of 1:00 p.m. ET. Vera Bradley options are more active than usual, with the bulk of the volume changing hands just before midday.

It looks like one trader eyeing fresh lows in the shares purchased 2,000 put options at the Aug. $22.5 strike for a premium of $1.25 apiece. The position may be profitable at expiration in August if shares in VRA slide more than 20.0% from the current price of $27.20 to settle below the effective breakeven point at $21.25. A roughly 22.0% correction in the shares to $21.25 during the next four months to expiration would drag the price of the shares to new record lows.

CMG ñ Chipotle Mexican Grill, Inc.
Shares in the provider of burrito bowls are selling off following the Companyís first-quarter earnings report, trading down 1.5% at $424.20 this afternoon, but options activity on the stock suggests at least one strategist is positioning for shares in Chipotle Mexican Grill to potentially hit a fresh record high in the next few weeks.

Of note is bullish volume building in the May $455 strike call options. It looks like some 1,500 of the contracts were purchased this morning for an average premium of $4.27 apiece. Call buyers profit at expiration next month as long as shares in Chipotle surge 8.3% to surpass the average breakeven price of $459.27. The stockís all-time high is the April 14th intraday peak at $442.40.

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