Call Activity Heavy on El Pollo Loco Holdings, Inc.'s (LOCO) Big Day

El Pollo Loco Holdings Inc (LOCO) calls are trading at two times the average intraday pace

Apr 20, 2015 at 2:16 PM
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Similar to the broader equities market, El Pollo Loco Holdings Inc (NASDAQ:LOCO) is having a big day. At last check, the stock was up 4.5% at $28.81. In the equity's options pits, traders are responding in kind, scooping up calls at a rate two times the average intraday pace.

Drilling down, the weekly 4/24 series is receiving notable attention, with buy-to-open activity detected at the 27.50-, 28-, 28.50-, and 29-strike calls. By initiating these long calls, speculators expect LOCO to extend today's lead, and settle north of the respective strikes by Friday's close, when the weekly series expires.

Meanwhile, longer-term traders have turned their attention to the June-dated series, and appear to be purchasing new positions at the 28 strike. The goal for these call buyers is for LOCO to rally north of $28 by the close on Friday, June 19 -- when the back-month options expire. The security topped out at an intraday high of $28.90 earlier.

From a wider sentiment standpoint, traders have preferred calls over puts on a stock that's up 44.3% year-to-date. In fact, LOCO's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio stands at a top-heavy 3.40. With 28% of El Pollo Loco Holdings Inc's (NASDAQ:LOCO) float sold short, though, some of this activity may be a result of shorts hedging against any additional upside.

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