Andrea Kramer (akramer@sir-inc.com) The shares of Wendy's/Arby's Group Inc. (WEN) staggered lower on Friday, after the fast-food firm reported a third-quarter loss on slipping same-store sales, and issued fiscal-year guidance at the low end of expectations. Meanwhile, the company also revealed plans to increase its stock buyback program (on hiatus until activist investor and primary shareholder Nelson Peltz decides his next move) by $170 million to $250 million, and boost its quarterly dividend to 2 cents per share.
However, despite WEN's subsequent decline on the charts, a handful of options speculators are betting on the stock to bounce back in the intermediate term. By Friday's closing bell, the equity had seen almost 4,400 calls cross the tape ? more than double its expected daily call volume, and about 10 times the number of WEN puts exchanged.
The bulk of the volume centered on the January 2011 5-strike call, which saw more than 3,500 contracts change hands. What's more, the majority of the calls traded closer to the ask price, and call open interest at the strike swelled over the weekend, pointing to buy-to-open activity. By purchasing the January-dated calls to open, the buyers are betting the shares of WEN will muscle back atop the $5 level within the options' lifetime.
From a broader sentiment standpoint, the affinity for calls stands in contrast to the pessimism among the near-term options crowd. The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.95 ranks higher than 92% of all others taken during the past year, implying that short-term speculators have been more skeptically skewed toward WEN just 8% of the time during the past year.
At last check, WEN has continued its decline, giving up 1.4% to linger in the $4.90 region.
No comments:
Post a Comment