Vodafone weeklys generate big profits for some traders as shares soar

Today’s tickers: VOD, TFM& WSM

VOD – Vodafone Group Plc – Short term bullish positions initiated on Vodafonelast week are generating substantial gains for some options traders today, withshares in the name up as much as 9.2% today to $32.12 after the U.K. carrierconfirmed it is in talks to sell its 45% stake in Verizon Wireless to VerizonCommunications Inc. Buyers of VOD weekly call options last Thursday saw a bigjump in the value of their contracts overnight. Open interest in contracts thatexpire at the end of this week is greatest in the Aug 30 ’13 $29.5 and $30calls, with 344 and 353 open contracts, respectively. A review of time andsales data in the $29.5 strike calls indicates one strategist purchased morethan 300 contracts on August 22nd for a premium of $0.50 each. Thejump in Vodafone’s shares today has roughly quadrupled the value of the $29.5strike calls versus this time last week to $2.40 per contract as of 11:45 a.m.ET. Similarly, time and sales data suggests most of the Aug 30 ’13 $30 callswere purchased last Friday at a premium of $0.35 per contract. Premium requiredto purchase the $30 calls today has more than tripled in value to $1.90 each asof the time of this writing. Overall options volume on Vodafone is running wellabove the stock’s average daily level this morning, with 32,400 contractstraded thus far in the session versus an average of 8,900 options. Trading inVOD calls is outpacing that of puts, with the call/put ratio hovering around3.2 as of 11:45 a.m. in New York.

TFM – Fresh Market, Inc. – Shares in Fresh Market fell as much as 10% today to$48.80, the lowest level since July 3rd, after the company postedlower than expected second-quarter revenue after the close on Wednesday. Thestock is still up roughly 35% over its 52-week low of $36.00 reached back inMarch, but trades down 15% versus this time last year. Options traders bracingfor shares in Fresh Market to continue lower during the next few weeks appearto buying the Sep $45 strike puts today. Upwards of 580 of the $45 puts tradedthis morning versus open interest of 481 contracts, and it looks like most ofthe volume was purchased for an average premium of $0.45 apiece. Put buyersstand ready to profit at expiration next month in the event that TFM sharesdecline another 9.0% to breach the average breakeven price of $44.55. Shares inFresh Market last traded below $44.55 in May.

WSM – Williams-Sonoma Co. – Options activity on retailer Williams-Sonoma onThursday indicates one or more traders are positioning for shares in the nameto potentially pull back to the lowest level in two months during the next fewweeks. The stock declined as much as 8.0% from Wednesday’s opening print of$60.32 to as low as $55.51 in the premarket on Thursday after the companyforecast full year earnings below average analyst estimates. WSM shares arewell off their lows at present, down just 0.55% at $56.65 as of 12:25 p.m. inNew York. The most actively traded options contracts by volume onWilliams-Sonoma today are the Sep $55 strike puts, with around 2,500 lotstraded versus open interest of 3,321 contracts. Time and sales data suggestsmost of the puts exchanged this morning were purchased for an average premiumof $1.11 each. The bearish contracts make money at expiration next month in theevent that WSM shares decline 5.0% from the current price of $56.65 to tradebelow the average breakeven point at $53.89.