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Option Clips: Lululemon Athletica, J.C. Penney, and Bank of America

Reviewing notable options activity on Lululemon Athletica inc., J.C. Penney Company, Inc., and Bank of America Corp

by 1/8/2014 1:46 PM
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Three equities drawing attention from options traders today are yoga apparel maker Lululemon Athletica inc. (NASDAQ:LULU), retailer J.C. Penney Company, Inc. (NYSE:JCP), and financial firm Bank of America Corp (NYSE:BAC). Here's a look at how traders have been aligning their speculative bets today.

  • Although Lululemon Athletica inc. (NASDAQ:LULU) is down 0.6% to $57.91 this afternoon, call volume has soared to nearly two times its average pace. The most sought-after position is LULU's January 2014 60-strike call, where the majority of the 5,469 contracts traded have gone off at the ask price. Additionally, implied volatility (IV) has jumped 3.8 percentage points, hinting at buy-to-open activity. Delta for the out-of-the-money (OOTM) call is 0.33, or 33%, suggesting a 1-in-3 chance of an in-the-money finish.

  • J.C. Penney Company, Inc. (NYSE:JCP) is having a dreary day -- down 8.2% at $7.51 -- after the struggling retailer failed to provide Wall Street with specifics for its holiday sales numbers. In JCP's options pits, put volume has tripled typical levels, and short-term speculators are targeting the January 2014 6 strike. Nearly 6,800 contracts have been exchanged at this OOTM put, mostly at the ask price, and data from the International Securities Exchange (ISE) confirms that at least a portion of the activity is of the buy-to-open kind.

  • Bank of America Corp (NYSE:BAC) speculators are eyeing a move to levels not seen since May 2010. The majority of the 49,614 January 2014 17-strike calls that have been exchanged -- including several large blocks - have done so on the ask side. With IV on the rise, it appears a fresh batch of bullish bets is being initiated. Should BAC fail to rise the 8.4% necessary to topple the strike price by next Friday's close, the most the traders stand to lose is the initial premium paid. At last check, BAC was seen lingering near $15.68.


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