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Option Brief: J.C. Penney Company, Inc. (NYSE:JCP) calls outnumbered puts by a healthy margin on Friday. Not surprisingly, the most active option was on the call side of the fence -- specifically, at the March 10 strike.
During the course of the session, 6,165 contracts traded at that strike -- the majority at the ask price, suggesting they were purchased. What's more, implied volatility rose by 2.9 percentage points, and open interest tacked on nearly 3,100 contracts over the weekend, hinting at newly bought bullish bets.
The JCP call buyers likely had one of two strategies in mind. On the one hand, they may be expecting the retailer's shares to spike above $10 by this Friday's closing bell, when the options expire. On the other, with more than half of JCP's total available float sold short, the traders might have scooped up the out-of-the-money calls as protection for their short stock positions. No matter what the strategy, the most the speculators have on the line is the initial premium paid.
Meanwhile, on the charts, J.C. Penney Company, Inc. (NYSE:JCP) has been on a tear recently. During the last month, the shares have outperformed the broader S&P 500 Index (SPX) by nearly 42 percentage points. This morning, the stock is 1.4% higher at $8.83.