Bull Buys Debit Call Spread on Bank of New York Melon Corp.

Today’s tickers: BK, CHRS, YHOO, WFC, RF, NTAP & BPOP BK - Bank of New York Mellon Corp. – Global financial services company, Bank of New York Mellon, received a vote of confidence by one options investor who appears to be positioning for a significant increase in the firm’s share price by July expiration. BK’s shares are currently trading 1.75% higher on the day to stand at $27.82 as of 12:20 pm (ET). It looks like the bullish trader purchased a debit call spread, buying roughly 12,500 calls at the July $29 strike for a premium of $0.94 apiece, and selling about the same number of calls at the higher July $32 strike for a premium of $0.14 each. Net premium paid for the spread amounts to $0.80 per contract. The call spreader makes money if shares of the underlying stock rally at least 7.1% to surpass the effective breakeven price of $29.80 by expiration day in a couple of months. Shares must surge 15% over the current value of the stock and exceed $32.00 each in order for the investor to pocket maximum potential profits of $2.20 per contract by July expiration. BK’s shares last traded above $32.00 on April 29, 2010, when the stock touched an intraday high of $32.17. The current 52-week high for shares of Bank of New York Mellon Corp. is $32.65, attained on April 13, 2010. CHRS - Charming Shoppes, Inc. – Optimistic options traders are selling short put options on Charming Shoppes just one week before the firm is scheduled to report first-quarter earnings before the opening bell on Thursday June 3, 2010. Charming Shoppes, Inc. is a multi-brand apparel retailer with market share in women’s plus-size specialty apparel. Investors exchanged 6,981 contracts on the stock by 12:30 pm (ET), which is more than 6.3 times greater than previously existing overall open interest of 1,106 contracts. Bullish trading patterns initiated on CHRS were perhaps inspired by the 4.6% jump in the price of the underlying stock to $4.79. Investors sold approximately 5,600 in-the-money puts at the October $5.0 strike to pocket an average premium of $0.77 per contract. Put sellers keep the full premium received on the sale if shares of the underlying stock rally above $5.00 by expiration. Charming Shoppes’ shares traded above $5.00 as recently as May 20, 2010, when the stock touched an intraday high of $5.08. Investors short the put contracts are apparently…