Bulls Shop TJX Before Monthly Sales
TJX reports same-store sales this morning, but the bulls got their shopping done early.
OptionMonster's tracking systems detected the purchase of about 6,300 November 42.50 calls yesterday, most of which priced or $0.55 to $0.75. The volume was above the open interest of 4,846 contracts when the session began, so yesterday's trades were initiating new positions.
Those investors have now locked in a $42.50 entry price on the discount retailer through expiration on Nov. 16. The calls can generate leverage in the event of a rally, but will expire worthless if the stock fails to climb.
TJX shares ended the session higher by 2.21 percent to $41.63. The stock was around $41 when most of the calls were bought, and that $0.60 gain into the close inflated the option premiums to $0.95 and $1 late in the afternoon.
The company has repeatedly issued strong sales and earnings, but shares have pulled back to their 200-day moving average. That could be leading some buyers to step in ahead of today's October sales data.
Total option volume was triple the daily average, with calls outnumbering puts by almost 5 to 1.
—By CNBC Contributor David Russell
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David Russell is a reporter and writer for OptionMonster. Russell has no positions in TJX.