Unusual Options Activity: Bloomin’ Brands (BLMN)

Shares of restaurant chain Bloomin’ Brands (BLMN) have shed nearly one-third of their value in the past year. However, one trader sees the possibility for a rebound in the second half of the year.

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  • That’s based on the January 2023 $15 calls. With 241 days until expiration, 10,000 contracts traded compared to a prior open interest of 23, for a 43-fold rise in volume on the trade. The buyer of the calls paid $5.80 to get in.

    The stock recently traded just over $19, making this trade about $4.00 in-the-money, with only a tiny percentage of the call option representing time premium. And shares are still well off their 52-week high of $20.

    Even with that drop in shares, the company has performed well, with earnings up nearly 10 percent in the past year and revenue up 15 percent, although that could slow with a slowing economy.

    Action to take: Investors may like shares here. The company just recently more than doubled its dividend payout, and shares yield about 2.9 percent here, even with a low payout ratio. Plus, even with a slowing economy, shares are cheap at 8 times forward earnings.

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  • The option is also a cheap call option, given how little of the option represents time premium for how much time is left on the clock. Traders can potentially nab high double-digit gains or even a triple-digit winner here on a strong enough rally in shares in the coming months.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.