Monday Options Brief: TUMI, TWC & NRF

Includes: CHTR, CLNS, TUMI
by: Interactive Brokers

TUMI - Tumi Holdings, Inc. - Shares in luggage and travel accessories maker, Tumi Holdings Inc., are moving higher for a third consecutive session, up 1.6% today at $20.77 as of 12:10 p.m. ET. The stock continues to rebound following a sharp pullback last week during the first trading session of 2013. Options activity on Tumi this morning suggests some traders are wary the stock could reverse gains in the near term. The most active options on the stock today are the Jan. $20 strike puts, with upwards of 1,200 lots changing hands versus open interest of just nine contracts. It looks like most of the puts were purchased for an average premium of $0.70 apiece, thus positioning buyers to profit in the event that Tumi's shares slide 7% from the current level to breach the average breakeven price of $19.30 by January expiration. Shares in the luxury luggage company last traded below $19.30 back in August 2012. Tumi Holdings, Inc. is scheduled to present at the 15th Annual ICR XChange Conference in Miami next Wednesday.

TWC - Time Warner Cable, Inc. - The provider of video, high-speed data and phone services popped up on our market scanners this morning due to heavy volume in the February expiry put options. Shares in Time Warner Cable kicked off the week in positive territory, but have since reversed gains to trade down 0.60% on the day at $97.17 as of 12:25 p.m. in New York. One options trader appears to be placing a floor on the cable operator's shares, selling 6,250 puts at the Feb. $90 strike for a premium of $0.60 apiece. The strategy makes maximum profits of $0.60 per contract as long as shares in TWC settle above $90.00 and the puts land out-of-the-money at February expiration. The put seller could wind up having 625,000 shares of the underlying put to him at expiration if shares in the name decline 7.4% to $90.00 during the next five weeks. Time Warner reports fourth-quarter earnings ahead of the opening bell on the 31st of January.

NRF - NorthStar Realty Finance Corp. - Shares in real estate finance company, NorthStar Realty Finance Corp., increased as much as 1.1% to a fresh four-year high of $7.45, bucking the broader trend today as most U.S. equities take a breather after last week's strong start-of-year performance. Shares in NorthStar are up nearly 9% since last Monday, contributing to the nearly 500% upside move off the stock's March 2009 low of $1.25. Options traders anticipating further gains in the stock during the next couple of months appear to be snapping up call options in the March expiry. The Mar. $7.5 strike calls attracted the heaviest volume, with some 3,700 contracts in play versus open interest of 751 positions. It looks like the bulk of the upside call options were purchased at a premium of $0.20 apiece in the first half of the session. Call buyers profit at expiration as long as shares in NorthStar rally another 4% over the current price of $7.40 to top the breakeven price of $7.70. NRF last traded above $7.70 back in September 2008.