IB Options Brief: P.F. Chang's China Bistro, Inc. (PFCB)

Posted February 17th, 2012 by Caitlin Duffy in Unusual Activity

Good Fortune For Some As Shares In P.F. Changís China Bistro Boom

PFCB ñ P.F. Changís China Bistro, Inc.
Options on the owner and operator of two restaurant chains, P.F. Changís China Bistro and Pei Wei Asian Diner, were more active than usual this week following the Companyís fourth-quarter earnings report ahead of the bell on Thursday. Shares are up sharply today on a number of analyst upgrades, trading higher by as much as 8.1% to touch an intraday peak of $38.50.

Traders that purchased calls on P.F. Changís yesterday despite the Companyís earnings miss, in some cases saw the value of their positions significantly increase overnight. It looks like investors purchased as many as 750 calls at the Mar. $35 strike yesterday for an average premium of $1.34 each. The calls today cost more than two times that amount, with the last traded price on the contracts up at $3.40.

Finally, options traders positioning for shares to extend gains purchased some 250 calls up at the Mar. $40 strike at a premium of $0.60 apiece. Investors long the $40 strike calls stand prepared to profit in the event that shares in P.F. Changís increase 7.0% over the current price of $37.95 to exceed the effective breakeven price of $40.60 at March expiration. PFCBís shares last traded above $40.60 back in July 2011.

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

Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.