Tuesday Options Brief: XLF, VSI & CBRL

 |  Includes: CBRL, VSI, XLF
by: Interactive Brokers

XLF - Financial Select Sector SPDR Fund - Shares in seven of the ten largest XLF holdings were trading lower this morning, dragging shares in the ETF down 0.40% to $17.19 at around 11:25 a.m. ET on Tuesday. Put buying on the Financial Select Sector SPDR Fund during the morning hours of the trading day suggested some options players were preparing for the price of the underlying fund to extend losses. It looks like traders purchased 75,000 puts at the June $16 strike for an average premium of $0.35 per contract. These positions start making money if shares in the XLF decline 9.0% from the current level to breach the average breakeven point on the downside at $15.65 by June expiration. Shares in the XLF last traded below $15.65 on December 4th. The price of the underlying is up roughly 5.0% year-to-date, and has gained nearly 30% since June of 2012.

VSI - Vitamin Shoppe, Inc. - Options on the specialty retailer of vitamins and nutritional supplements are more active than usual today, with shares in Vitamin Shoppe down sharply on the heels of the company's fourth-quarter earnings report ahead of the opening bell this morning. Shares in VSI are currently down more than 20% to stand at $50.33 as of 11:50 a.m. in New York. Buyers of in-the-money put options on the stock earlier in the trading session are seeing the value of their contracts rise as shares in the name continue to weaken. At around 9:45 a.m. ET, traders stepped in to purchase around 400 in-the-money puts at the April $55 strike for a premium of $4.20 per contract. Premium required to purchase the $55 strike put options, as of the time of this writing, has increased to $5.50 apiece just before midday on the East Coast. Traders long the puts at $4.20 per contract stand ready to profit at April expiration should shares in Vitamin Shoppe settle below the breakeven price of $50.80.

CBRL - Cracker Barrel Old Country Store, Inc. - Shares in the operator of Cracker Barrel restaurants surged nearly 13% today to hit a new all-time high of $75.45 during the first half of the session, after the company posted better-than-expected earnings and revenue and raised earnings guidance for fiscal year 2013. Fresh interest in front month calls on CBRL suggests one or more traders are positioning for shares in the name to extend gains in the near term. Bullish strategists traded more than 180 calls at the Mar. $80 strike against open interest of 16 contracts, buying most of the volume for an average premium of $0.25 apiece in the early going this morning. Call buyers may profit at expiration in two weeks in the event that shares in Cracker Barrel rally 6.0% over today's high of $75.45 to top the average breakeven point at $80.25.