Using Options To Play Deckers' Pop
Friday’s GDP report revealed some degree of spending on the part of the consumer and weighed on share prices at several retailers today. However, a positive earnings report from Deckers, the maker of Ugg boots, caught sleepy investors on the hop and created demand for its shares, which were last up by 12% at $118.80. Discount UGG BootsOptions activity appears to underscore today’s bullish movement, judging by the volume in the March contract where the timing of two trades suggests an investor anticipates shares to remain above $115 during the approaching three weeks.
The investor appeared to sell around 1,000 Deckers put options at the $115 strike at $3.40 and paid $1.80 for 1,600 puts at the $110 strike. The structure of the trade generates a credit to this bullish investor who stands ready to take delivery of shares should they decline to $115 by the time the options expire next month. However, wow goldthe sale of the lower strike limits the risk on the trade in the meantime by allowing him to draw a line under losses at that point. Option implied volatility slumped in the aftermath of earnings from 46% to 33%.
A three-legged bullish options combination took place on the retailer of consumer electronics today. The transaction was likely enacted by an investor expecting significant share price appreciation by expiration in April. Best Buy’s shares were up earlier in the session but are down 0.50% to $36.69 as of midday. Perhaps shares rallied in morning trading because the firm was initiated as a new ‘buy’ with a 12-month target share price of $45 at BB&T ( BBT - news - people ) Capital Markets.Christian Louboutin The optimistic combo-trader appears to have sold put options in order to partially finance the purchase of a ratio call spread. The investor purchased 4,000 calls at the April $37 strike for a premium of $1.32 apiece and sold 8,000 calls at the higher April $40 strike for an average premium of $0.37 each. Finally, the trader sold 4,000 puts for a premium of $0.65 apiece at the April $34 strike.
The transaction results in a net credit of $0.07 per contract to the investor, which he keeps if Best Buy trades above $34 through April expiration. Additional profits accumulate if Best Buy’s shares rally above $37.Nfl jerseys Maximum potential profits of $3.07 per contract, including the credit received today, are available to the trader if shares jump 9% from the current price to $40.00 by expiration day.
Gloomy data on existing home sales from the National Association of Realtors inspired one options trader to initiate a long-term bearish play in the January 2011 contract. The investor purchased 5,000 puts at the January 2011 $15 strike for an average premium of $1.54 each and sold 5,000 puts at the lower January 2011 $10 strike for $0.24 apiece in order to establish a debit put spread on the fund. ugg cardy bootsThe net cost of the transaction amounts to $1.30 per contract. Maximum available profits of $3.70 are attainable on the spread if shares of the underlying plummet 37% from the current price to $10 by expiration in January.
The Miami, Fla. home-building company snagged a new rating of buy, with a 12-month share price target of $21 at Ticonderoga Securities yesterday. Today shares are up slightly by about 0.25% to $16.31. fitchBullish traders dominate options activity on the stock. The most popular strategy employed on the home-construction company was plain-vanilla put selling. It looks like roughly 7,000 puts were shed at the May $15 strike for an average premium of $0.95 apiece.