IB Options Brief: Gap, Inc. (GPS)

Posted August 30th, 2012 by Caitlin Duffy in Unusual Activity

Gap Calls Payoff After Positive Same-Store Sales Report

GPS ñ Gap, Inc.
Shares in clothing and accessories retailer, Gap, Inc., rallied to their highest level in more than a decade on an intraday basis this morning, rising 3.2% to $36.30 after the company reported a 9% increase in August same-store sales and handily beat average analyst expectations for a 5.5% increase in the metric.

Options traders positioning for short-term share price appreciation in the largest U.S. specialty-apparel retailer on Wednesday ahead of the positive same-store sales report, in some cases saw the value of their bullish positions roughly double overnight.

Open interest in the Aug. 31 í12 $35 strike calls increased by more than 6,200 contracts following yesterdayís trading session, rising to total 6,752 open positions. A review of time and sales data from Wednesdayís transactions in the $35 calls suggests most of the volume was purchased for an average premium of $0.66 apiece.

The deep in-the-money calls are now changing hands with a last-traded price of $1.28 apiece, nearly twice what traders paid for the contracts yesterday. Volume in the $35 calls currently stands at 212 contracts as of 11:20 a.m. ET, indicating options traders are still holding their positions.

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