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Options Intelligence Report: Hospira, Inc. (HSP) & Chico's FAS, Inc. (CHS)

HSP – Hospira, Inc.
The sharp pullback in the price of Hospira’s shares today attracted the attention of contrarian options investors who appear to be initiating bullish stances on the stock in order to reel in profits should the price of the underlying stock rebound by September expiration. Shares of the pharmaceuticals firm declined as much as 9.7% this morning to secure an intraday low of $51.30 following the release of its second-quarter earnings report.

HSP posted net income, excluding one-time items, of $0.86 a share, which beat average analyst expectations of $0.79 a share. However, the firm did not change its 2010 earnings forecast and the price of its shares plunged on concerns performance could be weaker in the second half of the year. Hospira’s shares are currently down 7.00% to stand at $52.83 as of 11:50 am ET.

Contrarians refusing to buy into the pessimism just yet opted instead to buy call options in the September contract. Investors hoping to see shares rally in the next couple of months purchased approximately 2,500 calls at the September $55 strike for an average premium of $1.25 per contract. Call buyers are positioned to profit should Hospira’s shares surge 6.5% over the current price of $52.83 to surpass the average breakeven point to the upside at $56.25 by expiration day. We note that HSP’s shares were trading as high as $58.45 yesterday.

 


CHS – Chico’s FAS, Inc.
Optimistic options players are buying calls on the national specialty retailer of private branded women’s clothing and accessories today perhaps to get in on the ground floor of what could wind up being a significant rebound in the price of its shares. CHS’s shares plunged 12.7% on Tuesday from an intraday high of $10.49 to an intraday low of $9.16 after it was added to Goldman Sachs’ conviction sell list. Shares of the retailer inched slightly higher by 0.10% today to trade at $9.41 by 12:40 pm ET.


Investors itching for a near-term resurgence in the value of CHS shares scooped up approximately 2,400 calls at the August $10 strike for an average premium of $0.29 apiece. Call buyers make money as long as the clothing retailer’s shares surge 9.35% over the current price of $9.41 to exceed the average breakeven point on the calls at $10.29 ahead of August expiration.

                                         

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