IB Options Brief: Jos. A. Bank Clothiers, Inc. (JOSB)

Posted August 29th, 2012 by Caitlin Duffy in Unusual Activity

Call Options On Trend At Jos. A. Bank

JOSB ñ Jos. A. Bank Clothiers, Inc.
Shares in the retailer of menís clothing and accessories jumped 19% today to an intraday and three-month high of $49.48 after the company posted better-than-expected second-quarter earnings and sales ahead of the opening bell. Some options players appear to be bulking up on bullish call options, perhaps in the expectation that shares in the clothing company have more room to run in the near term.

Meanwhile, trading activity in JOSB options ahead of the earnings report suggests some traders are sitting on sizable paper profits following the big move in the price of the underlying shares. Upside call buyers took to the Sep. $50 strike today, exchanging upwards of 1,500 contracts versus previously existing open interest of 389 open positions. It looks like much of the volume was purchased for an average premium of $1.24 apiece, thus positioning buyers of the contracts to profit if JOSB shares rally another 3.6% over todayís high of $49.48 to top the average breakeven price of $51.24 by expiration day next month.

The Oct. $50 strike calls attracted buyers this morning, as well. Increases in open interest levels in the Sep. $40 and $45 strike calls overnight indicates positions were opened during Tuesdayís session ahead of the earnings report on Wednesday. A review of time and sales suggests buyers snapped up around 200 of the Sep. $40 strike call at an average premium of $3.61 and purchased approximately 475 of the Sep. $45 strike calls for an average premium of $1.19 each yesterday. These deep in-the-money calls now trade at far higher premiums of $8.85 and $4.10 apiece, respectively.

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