Zale options active as shares pop after earnings

Today’s tickers: ZLC, GCI& CHS

ZLC – Zale Corporation – Shares in jewelry retailer, Zale Corp., are soaringtoday, rallying as much as 23.6% during morning trading to touch a new four-yearhigh of $11.08 after the company posted a narrower than expected fourth-quarterloss and its highest full year net income in six years ahead of the openingbell. Some options traders looking for the stock to rise after earningsinitiated bullish trades on Zale two weeks prior to the report. Traders snappedup ZLC call options back on August 14th, for example, purchasingaround 500 of the Sep $10 calls for an average premium of $0.86 apiece. Thevalue of these calls has since increased substantially, with the asking premiumup at $1.35 each as of 12:30 p.m. ET. Options traders also picked up the Sep$12.5 strike and the Nov $12.5 strike calls back on August 14th at premiumsof $0.35 and $0.60 per contract, respectively. Today, it looks like traders areadding to bullish interest on the jeweler. More than 900 of the Nov $12.5strike calls changed hands during morning trading versus open interest of 640contracts, and it looks like most of the call options were purchased at a premiumof $0.80 each. Buyers of the $12.5 strike calls stand ready to profit atNovember expiration should shares in ZLC rally 20% over today’s high of $11.08to top the breakeven price of $13.30.

GCI – Gannett Co. Inc. – Trading in Gannet Co. put options today suggestsone strategist is bracing for shares in the media company to potentially pullback in the near term. Shares in GCI, up more than 60% since this time lastyear, are roughly flat today to stand at $24.36 as of midday in New York. Sharesin GCI are down roughly 10% since June 13th when the stock soared toa 52-week high of $26.99 on news it would acquire television company, BeloCorporation. Activity in the October expiry puts this morning indicates onetrader is prepared for shares in Gannett to decline further during the next sevenweeks. Upwards of 3,000 Oct $23 puts changed hands during the first hour of thesession against open interest of 880 contracts, with most of the volumepurchased at a premium of $0.80 each. The position may be profitable atexpiration in October if shares in Gannett decline 9.0% from the current priceof $24.36 to trade below the breakeven point at $22.20.

CHS – Chico’s FAS, Inc. – Shares in clothing and accessories retailer, Chico’s,are on the rise today, up 6.65% at $16.35 as of 12:15 p.m. ET following the company’ssecond-quarter earnings release and conference call. The company posted netincome and sales for the quarter that missed analyst estimates. November expirycall options changing hands on Chico’s during the first 15 minutes of thetrading session suggests one or more traders are positioning for shares in theretailer to extend gains during the next few months. The Nov $19 strike callsattracted the most volume, with one strategist purchasing more than 600contracts at a premium of $0.20 each. The call buyer may profit at Novemberexpiration should shares in CHS surge 17% to exceed the effective breakevenprice of $19.20. The Nov $18 calls are also active today, with roughly 250 lotspurchased in the early going at a premium of $0.35 each. These contracts makemoney at November expiration if shares in the retailer gain 12% to settle above$18.35.