Wednesday Options Brief: LNKD, MW & GFI

Includes: GFI, LNKD, TLRD
by: Interactive Brokers

LNKD - LinkedIn Corp. - Shares in the professional social-networking site operator jumped 6% to a three-month high of $113.89 in the first half of the trading session after the Internet stock was raised to 'buy' from 'hold' with a share price target of $142.00 at Jefferies. Traders snapping up weekly calls on the stock this morning appear to be climbing aboard the bullish-bandwagon, positioning for additional near-term gains in the price of the underlying shares in the back half of this week. Volume in the weekly contracts is heaviest at the Sep. 07 '12 $115 strike where upwards of 3,100 calls changed hands against open interest of 543 positions. It looks like most of the $115 calls were purchased for an average premium of $0.47 apiece, thus preparing buyers to profit at expiration in the event LNKD shares exceed the average breakeven price of $115.47. Upside calls are also in play at the Sep. 07 '12 $120 strike, with roughly 460 of the contracts purchased this morning for an average premium of $0.15 each. Some bullish positions initiated yesterday and Friday are already seeing substantial paper profits given the big upside move in the shares today. Upside call buyers who picked up around 700 of the Sep. 07 '12 $110 strike call during the prior two trading sessions paid between $0.60 and $0.75 apiece for most of the contracts. Premium on the $110 weekly calls has increased five-fold since then from roughly $0.75 each on Tuesday to $4.10 per contract as of 12:15 p.m. ET on Wednesday.

MW - The Men's Wearhouse, Inc. - Options on men's clothing retailer, Men's Wearhouse, are active ahead of the company's second-quarter earnings report after the close this afternoon. Shares in the name are up 0.90% at $31.80 as of 12:35 p.m. ET, and at least one strategist is positioning for further gains in the share price in the near term. The trader appears to have purchased a bull call spread, buying 600 calls at the Sep. $32 strike and selling the same number of calls up at the Sep. $35 strike, all for a net premium outlay of $1.20 per contract. The strategy pays off at expiration if shares in MW rally another 4.4% to top the effective breakeven price of $33.20, with maximum possible profits of $1.80 per contract available in the event of a 10% move to the upside above $35.00. The limited risk, limited reward strategy could result in the full loss of premium paid on the position should shares slip post-earnings and settle below $32.00 at expiration.

GFI - Gold Fields Ltd. - At least one options player appears to be loading up on in-the-money call options on gold mining company, Gold Fields Ltd., today with shares in the name up 2.7% at $12.49 in early-afternoon trade. The Oct. $12 strike call has changed hands more than 14,000 times against open interest of 6,643 contracts thus far in the session. Most of the calls were purchased for an average premium of $0.70 apiece this morning, and may be profitable at expiration next month as long as shares in GFI surpass the average breakeven price of $12.70. Gold Fields announced Wednesday that an unlawful strike that began August 29th involving thousands of workers at a mine in South Africa has ended, with workers agreeing to return to work.