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Hhgregg Draws Option Bulls Ahead of Earnings

David Russell|Writer, OptionMonster
Monday, 21 May 2012 | 5:39 AM ET

Hhgregg

George Frey | Bloomberg | Getty Images

has dropped to long-term support levels, and the bulls are stepping in before the company’s earnings report this week.

OptionMonster’s tracking programs detected the purchase of about 4,000 June 9 calls for $0.95 to $1.10 on Friday, with the single largest block pricing for $1. There was no open interest in the strike before the trade appeared, so this is a new position.

Hhgregg

Callslock in the price investors must pay for the stock. They can generate significant leverage if their underlying stock rallies, but will expire worthless if it fails to move.

Hhgregg shares fell almost 4 percent late on Friday morning, but then snapped back and finished the session unchanged at $9.59. The electronics chain has been struggling against tight competition and is trying to hold support around the same level where it bounced last year. The company’s next earnings results come out before the bell on Wednesday.

Overall option volume was 35 times greater than average in the session, with calls outnumbering putsby 12 to 1.

—Russell has no positions in HGG.

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David Russellis a reporter and writer forOptionMonster .

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