Options Unusual Activity

IB Options Brief: Domino’s Pizza, Inc. (DPZ), JPMorgan Chase & Co. (JPM) & Nordstrom, Inc. (JWN)



DPZ - Domino’s Pizza, Inc. – Shares in Domino’s are bucking the trend today, rising as much as 2.2% to an all-time high of $43.74 on Thursday morning, even as most stocks decline on weaker-than-expected consumer confidence data for the month of December and the failure of U.S. lawmakers to arrive at a budget compromise.

Options traders hungry for fresh highs in Domino’s Pizza shares in the first few months of the New Year snapped up call options on the name today. Bulls picked up around 100 in-the-money calls at the Jan. $43 strike for an average premium of $1.11 apiece, and purchased 70 of the higher Jan. $44 strike calls at an average premium of $0.60 each.

Like-minded strategists looked to the Mar. $45 strike calls as well, buying 150 of those contracts at an average premium of $1.65 a-pop. Traders long the $45 strike calls stand ready to profit at expiration in March 2013 should shares in DPZ rally another 6.7% to top a new record high of $46.65 by expiration.

The stock has gained 40% during the prior six month period. Domino’s Pizza is scheduled to report fourth-quarter earnings at the end of February, several weeks prior to March options expiration.

 

JPM - JPMorgan Chase & Co. – Options traders positioning for shares in JPMorgan Chase & Co. to rally during the first week of the New Year snapped up weekly calls on the largest U.S. bank by total assets this morning.

Shares in JPM are down 1.8% this morning at $43.17, moving lower along with the broader market on disappointing consumer confidence data and concern the U.S. may go over the fiscal cliff.

Traders anticipating a strong start to the New Year for shares in JPMorgan appear to have purchased more than 1,000 calls at the Jan. 04 ’13 $44 strike for an average premium of $0.52 apiece during the first 20 minutes of the trading session today.

Call buyers stand ready to profit at expiration next week should shares in JPM reverse course and gain 3.1% to surpass the average breakeven price of $44.52. JPMorgan Chase & Co. is scheduled to report fourth-quarter earnings ahead of the opening bell on January 16th.

 

JWN - Nordstrom, Inc. – Shares in the department store operator fell as much as 2.9% the day after Christmas after data showed holiday sales were the worst since 2008, and as investors brace for the U.S. to potentially go over the fiscal cliff.

Nordstrom’s shares reversed some of those losses on Thursday morning, but have since returned to negative territory, down 0.30% at $51.25 as of midday in New York trading. The stock has dropped 7.5% during the past four weeks, but some options traders are positioning for the price of the underlying to kick of 2013 in rally mode.

Bullish players picked up in-the-money calls on the name this morning, buying some 1,150 calls at the Jan. $49 strike for an average premium of $3.06 apiece, and purchasing roughly 1,500 calls at the higher Jan. $50 strike for an average premium of $2.39 each.

Call buyers stand ready to profit at January expiration should shares in Nordstrom climb 1.6% and 2.2% over the current price of $51.25 to top average breakeven points at $52.06 and $52.39, respectively.

 

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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.

 


About Caitlin Duffy


Equity Options Analyst

Author's web site: ibanalyst@interactivebrokers.com


View Caitlin Duffy's post archive >

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The Options News Rundown

Your source for the most important news and information from the world of options.

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The Options Insider Radio Network

All of our radio programs in one convenient place.

The Options Insider Radio Network

Options Insider Radio

The original options podcast. Features interviews with leading options figures.

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The Option Block

This high-octane program features education, analysis, strategies and unusual activity.

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Volatility Views

The premier radio program for volatility traders.

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The Long And Short Of Futures Options

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The Advisor's Option

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Options Boot Camp

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