IB Options Brief: LinkedIn Corp. (LNKD) & Lululemon Athletica, Inc. (LULU)

Posted May 3rd, 2012 by Caitlin Duffy in Unusual Activity

LNKD ñ LinkedIn Corp.
Shares in the social networking site for professionals are up 0.25% this afternoon to stand at $106.65 ahead of the Companyís first-quarter earnings report after the final bell today. Trading traffic in LinkedIn weekly calls suggests some traders are positioning for shares in the name to extend gains following the report.

Notable bullish interest is building in the May 04 í12 $115 strike options where more than 2,000 calls changed hands against open interest of 878 contracts by 12:15 pm in New York. It looks like most of the calls were purchased for an average premium of $3.07 apiece, thus positioning traders to profit should shares in LinkedIn surge 11.0% to surpass the average breakeven price of $118.07 by expiration at the end of the week.

A push above $118.07 would bring the shares within 4.0% of the stockís record intraday high of $122.70, a price at which shares have not traded since the May 19, 2011, IPO.

LULU ñ Lululemon Athletica, Inc.
High-end athletic apparel retailer, Lululemon Athletica, hit yet another all-time high of $81.09 on Thursday, bringing the stockís stunning year-to-date rally to more than 70.0%. Bullish bets initiated on the stock during the past five trading sessions have certainly paid off for some strategists holding options that have in some cases skyrocketed in value this week.

Last Friday, one trader looking for the stock to rally above $75.00 this week purchased 100 of the May 04 í12 $75 strike calls for $0.91 apiece. Today, the contracts are deep in-the-money, with those looking to buy the options paying as much as $6.10 apiece for the $75 strike calls. Paper profits available on the position at present are sizable, with premium on the calls up more than 600%.

Meanwhile, calls purchased yesterday afternoon are also likely to yield substantial profits for LULU bulls at expiration. Open interest in the May 04 í12 $80 strike calls indicates traders purchased at least 700 of the contracts for a premium of $0.75 on Wednesday. Call buyers today saw the contracts trade up to an intraday high of $1.51 apiece.

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