Talbots Killed, Yet Options Alerts Matter (TLB)

Posted in General, Options 
December 7th, 2010

The Talbots Inc. (NYSE: TLB) is having an awful day in the markets and on very strong volume.  The earnings report and the guidance are to blame.  While profits rose 17%, lower revenue and lower guidance is a drag and then some.

Earnings were $0.27 EPS and revenue was $299.1 million, while Thomson Reuters was calling for $0.25 EPS and $303.1 million in revenues.  Guidance was put at a loss for the coming quarter and that translates to an annual guidance of $0.70 to $0.78 EPS against a Thomson Reuters estimate of $0.87 and a prior forecast of $0.84 to $0.92.

At 11:40 AM EST we have shares down over 19% at $9.21 against a 52-week trading range of $6.81 to $17.79.  More importantly, the volume is already over 18.5 million, more than six-times than the 3.05 million shares on an average trading day.

We are seeing a move in options trading as well, although many trades are mixed.  The DEC-2010 CALLS showed the following:
CALL$    Volume    OpInt
9.00    1,183    653
10.00    1,227    3,377
11.00    1,469    5,652

Elsewhere, the JAN-2011 CALLS:
CALL$    Volume    OpInt
10.00    1,389    2,344
11.00    1,122    2,321

Even the JAN-2012 CALLS are active:
CALL$    Volume    OpInt
15.00    2,055    3,721


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