Wednesday Options Brief: BNNY, LSI & RFMD

 |  Includes: BNNY, LSI-OLD, QRVO
by: Interactive Brokers

BNNY - Annie's, Inc. - Organic and natural food products provider, Annie's, is taking it on the chin today after the company voluntarily recalled Annie's Homegrown Frozen Pizza. The recall, initiated as a precautionary measure "due to the possible presence of fragments of flexible metal mesh caused by a faulty screen at a third-party flour mill", according to a press release issued yesterday, spooked investors and sent shares in the name down nearly 14% after-hours to as low as $33.20. BNNY shares are currently off their lowest levels but remain firmly in negative territory, down 5.4% on the session to stand at $36.40 as of 11:10 a.m. ET on Wednesday morning. Options traders bracing for shares in Annie's to potentially weaken further in the near term snapped up bearish puts on the stock. The Feb. $35 strike puts are the most actively traded contracts, with volume approaching 480 lots versus previously existing open interest of 32 contracts. Time and sales data indicates most of the puts were purchased for an average premium of $1.00 apiece. Put buyers may profit at February expiration in the event that BNNY shares decline 6.6% from the current price of $36.40 to breach the breakeven point on the downside at $34.00. The company is scheduled to report third-quarter earnings next week.

LSI-OLD - LSI Corp. - Upside call options on the maker of semiconductors and software are active this morning ahead of the company's fourth-quarter earnings report after the closing bell. Shares in LSI Corp. are up 0.40% on the day at $7.33 as of 11:30 a.m. ET. The bulk of the volume in LSI options changed hands at the Feb. $7.0 strike, where upwards of 3,300 in-the-money calls traded against open interest of 1,512 contracts. It looks like most of the calls were purchased during the first few minutes of the trading session at an average premium of $0.60 apiece. Call buyers stand ready to profit at expiration should the price of the underlying climb 2.6% to top the average breakeven price of $7.60. The Feb. $8.0 strike calls have also been active recently. Traders appear to have purchased roughly 4,000 of the $8.0 strike calls for an average premium of $0.12 apiece during past three trading sessions. These contracts may be profitable at expiration next month should LSI's shares jump 11% to top $8.12.

RFMD - RF Micro Devices, Inc. - Shares in RF Micro Devices are trading higher on Wednesday, rising as much as 7.0% to $5.24 in the early going after the manufacturer of semiconductor components reported better-than-expected third-quarter results after the close on Tuesday. The stock is off its highs, but up better than 2.0% on the day to stand at $5.00 as of 11:55 a.m. in New York trading. One or more options traders preparing for shares in RFMD to potentially rise to new 52-week highs during the next couple of months picked up March expiry calls on the name this morning. More than 5,900 calls have changed hands at the Mar. $6.0 strike against zero existing open positions. Traders appear to have purchased most of the calls for an average premium of $0.11 each, and may profit should RFMD shares rally another 22% over the current price of $5.00 to surpass the average breakeven point at $6.11 by March expiration.