Executive Error Entices JC Penney Company, Inc. (JCP) Bulls

Call buyers are rushing to J C Penney Company Inc (NYSE:JCP) today after a company executive reportedly emailed first-quarter same-store sales figures to an analyst by mistake. The email reported a 6% increase in same-store sales for the quarter -- larger than the company expected. Now, call volume is running at four times the regular intraday pace in JCP's options pits.

The most popular contract by a wide margin is the April 9 call, where bets are being made on both sides of the aisle -- including a 10,000-contract block that may have been newly purchased. Also seeing heavy action is the April 9.50 call. Activity here looks to be of the buy-to-open variety, as traders wager on the shares to eclipse $9.50 by Friday's close, when front-month options expire. JCP's intraday high currently sits right at the strike.

Call buying has been the ongoing trend among the security's speculators. During the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 3.89 JCP calls have been bought to open for every put. Looking back, the stock's 10-day call/put volume ratio has been higher only 8% of the time during the past 52 weeks.

There's a chance some of this call buying is the result of short-seller hedging. For instance, 32.1% of JCP's float is sold short -- nearly 94 million shares. At the equity's average daily volumes, it would take these bears over eight sessions to buy back their bets.

Technically, J C Penney Company Inc (NYSE:JCP) has been strong of late, outpacing the S&P 500 Index (SPX) by roughly 20 percentage points during the past month. It's a different story today, as the shares are down 3.3% at $9.09.