Monday Options Brief: GMCR, INTC, SHFL

Includes: GMCR, INTC, SHFL
by: Interactive Brokers

GMCR - Green Mountain Coffee Roasters, Inc. - Weekly options on the specialty coffee company and provider of Keurig single-cup brewing systems are active this morning with shares in Green Mountain up nearly 10% in the first half of the session to touch $30.49, the highest the shares have traded since May. Green Mountain's shares are moving higher for a third consecutive session, having rallied sharply last week, and some options traders appear to be positioning for the price of the underlying to extend gains this week. Bullish bets are on the rise at the Sep. 14 '12 $29 and $30 strikes, the two highest strike prices currently available in GMCR weekly options. Traders exchanged upwards of 1,100 in-the-money calls at the $29 strike, and appear to have purchased most of the volume for an average premium of $1.28 apiece. Weekly call volume is heaviest up at the $30 strike where more than 2,200 lots changed hands against open interest of 817 contracts. It looks like most of the $30 calls were purchased this morning for an average premium of $0.91 each. Traders long the $30 calls may profit at expiration in the event Green Mountain's shares settle above the average breakeven price of $30.91. Shares in the seller of K-cups are still down nearly 75% since this time last year. Overall options volume on GMCR is greater than usual, with 60,000 contracts in play as of midday in New York versus the stock's average daily options volume of around 18,500 contracts.

INTC - Intel Corp. - Shares in chip giant, Intel Corp., are getting hit today on concerns the company may need further cuts to guidance following Friday's downward revision to its third-quarter revenue forecast. The stock is down 3.3% this afternoon to stand at $23.40 as of 12:30 p.m. ET, adding to a more than 4% drop in the price of the underlying on Friday. Trading traffic in INTC weekly options are mixed, with some strategists positioning for a rebound in the share price, while others prepare for further weakness in the near term. Options traders positioning for shares to reverse course this week snapped up around 4,400 calls at the Sep. 14 '12 $24 strike for an average premium of $0.18 per contract. Call buyers stand ready to profit at expiration in the event that Intel's shares rally 3.3% to top the average breakeven price of $24.18. Meanwhile, buyers of around 1,100 of the Sep. 14 '12 $22.5 strike put at a premium of $0.05 apiece make money if the stock continues to pullback. The bearish position may pay off at expiration this week if Intel's shares slide at least 4% from the current level to settle below $22.45. Intel's third-quarter results are expected out after the final bell on October 16th.

SHFL - Shuffle Master, Inc. - Call options on global gaming manufacturer, Shuffle Master, Inc., are more active than usual this afternoon ahead of the company's third-quarter earnings report after the final bell. Shares in the maker of casino games and other entertainment products are up 1.4% at $15.45 as of 1:20 p.m. ET. Options traders appear to be initiating largely bullish bets on Shuffle Master prior to the earnings report, with the Sep. $16 strike call seeing the most volume in the first half of the session. More than 1,100 of the $16 strike calls have changed hands so far today and it looks like most of the contracts were purchased for an average premium of $0.62 apiece. Call buyers may profit at expiration in the event that shares in Shuffle Master soar 7.5% to exceed the average breakeven price of $16.62. Bullish positioning spread to the Oct. $17 strike where 185 calls were picked up at a premium of $0.45 each. Traders long the $17 strike calls make money as long as SHFL shares top $17.45 at expiration next month.