Kohl’s Corp. call options active as shares sell off

Kohl’s Corporation (NYSE:KSS) – U.S. equities are moving higher on Thursday morning on optimism legislators will tackle the fiscal cliff, but shares in apparel and home goods retailer, Kohl’s Corporation (NYSE:KSS), failed to join in on the rally after the company said November same-store sales will be down 5.6% versus the 2.1% increase in the metric forecast by analysts. The department store operator’s shares are off the lowest levels of the session, down 8% on the day at $47.00 as of 11:40 a.m. in New York. Upside call buying in the front month options suggests some traders anticipate a rebound in the price of the underlying in the near term. The heaviest trading traffic in the December expiry options is in the $50 strike calls where around 3,300 contracts have changed hands against open interest of 845 positions. Time and sales data indicates the bulk of the volume was purchased for an average premium of $0.15 apiece. Call buyers stand ready to profit at expiration next month should shares in Kohl’s Corporation (NYSE:KSS) increase 7% to surpass the average breakeven price of $50.15. Finally, it appears one options trader who purchased 2,000 calls at the Dec. $52.5 strike yesterday took a big hit today with the substantial decline in the stock price. Premium on the calls, purchased at $0.55 apiece on Wednesday, has collapsed overnight to just $0.05 per contract as of midday on the East Coast.

Infoblox Inc (NYSE:BLOX) – Shares in the provider of network automation technology and services are soaring today after the company swung to a first-quarter profit of $0.06 a share, beating the average analyst forecast for a break-even quarter. The stock is up nearly 37% as of midday in New York to trade at $19.01, the highest level since mid-October, and was raised to ‘Outperform’ from ‘Neutral’ with a 12-month target price of $21.00 at Wedbush. Options on Infoblox Inc (NYSE:BLOX) are far more active than usual, with 715 contracts in play versus the stock’s average daily options volume of just 70 contracts. Calls are more active than puts, with the call-to-put ratio hovering around 2.0 this afternoon. One options trader positioning for shares in Infoblox Inc (NYSE:BLOX) to extend gains snapped up 150 calls at the Jan. 2013 $20 strike for an average premium of $0.75 apiece. The call buyer stands ready to profit at expiration should shares in Infoblox Inc (NYSE:BLOX) tack on another 9% to exceed the effective breakeven price of $20.75.

TASER International, Inc. (NASDAQ:TASR) – Bullish options on the maker of TASER International, Inc. (NASDAQ:TASR) Electronic Control Devices (ECDs) and other safety technologies are active this morning despite the more than 6.5% decline in the price of the shares to $8.43 today. Traders driving volume in upside calls on the name appear to be positioning for shares in the name to recover during the next few months. The bulk of the action is at the Jan. 2013 $10 strike where some 4,400 call options have traded against previously existing open interest of 773 contracts. It looks like most of the $10 calls were purchased for an average premium of $0.20 apiece, thus positioning buyers to profit should shares in TASER International, Inc. (NASDAQ:TASR) jump more than 20% over the current price of $8.43 to exceed the breakeven point at $10.20 at January expiration. Like-minded strategists prepared to benefit from a rally in TASER International, Inc. (NASDAQ:TASR) shares purchased around 1,600 calls at the Mar. $10 strike for an average premium of $0.35 apiece. Overall options volume on TASER International, Inc. (NASDAQ:TASR) is approaching 6,800 contracts as of 12:20 p.m. ET, a high-volume day for a stock that sees average daily options volume of around 435 contracts.

Caitlin Duffy

Equity Options Analyst

The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.