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Bearish Options Action In Athenahealth As Shares Slide

 

Today’s tickers: ATHN, SBUX & MRVL

ATHN - athenahealth, Inc. – A downgrade to ‘underperform’ from ‘hold’ with a 12-month share price target of $60.00 at Jefferies sent shares in the provider of cloud-based business services for healthcare providers down as much as 12.6% to $70.00 this morning. Shares in athenahealth are off their lows of the session as of midday in New York, though the stock still trades 9% lower on the day at $72.81. One options player positioning for shares in the name to move closer to Jefferies’ target share price of $60.00 during the next couple of months established a bearish stance in the December expiry options. The trader appears to have purchased a 1,000-lot Dec. $60/$75 put spread for a net premium of $5.80 per contract. Profits are available on the spread if shares in ATHN decline 5% from the current price to breach the effective breakeven point at $69.20. The strategist may walk away with maximum potential profits of $9.20 per contract at December expiration in the event that athenahealth’s shares plunge 18% to $60.00. Shares in ATHN are up 45% year-to-date despite Friday’s sharp pullback.

SBUX - Starbucks Corp. – Shares in Starbucks went the way of the market on Friday, sliding lower on the heels of disappointing earnings from the likes of Chipotle, McDonald’s and General Electric, among others. The stock is down 4.1% at $45.47 as of 12:20 p.m. in New York. Call and put buying in the January 2013 expiry options this morning suggests mixed expectations for the direction SBUX shares are likely to take during the next few months. Traders itching for a rally in the price of the underlying appear to have purchased 2,000 calls at the Jan. 2013 $47 strike for an average premium of $2.08 apiece. Call buyers stand prepared to profit at expiration next year should the stock climb 8% to top the average breakeven price of $49.08. Meanwhile, trading traffic in the Jan. 2013 $46 strike put, purchased roughly 2,000 times this morning at an average premium of $2.52 each, prepares put buyers to profit in the event of a more than 4% move lower in the share price to $43.48 by expiration. The specialty coffee company is scheduled to report fourth-quarter earnings on November 1st after the closing bell.

MRVL - Marvell Technology Group, Ltd. – Chip maker, Marvell Technology Group, is getting slammed today, with shares in the name tumbling to the lowest level since March 2009, after the company lowered its fiscal third-quarter revenue guidance and announced the resignation of its CFO. Shares in Marvell are currently down 14% to stand at $7.60 as of 12:35 p.m. ET. Put activity on MRVL this morning indicates some traders are preparing for shares to extend declines in the near term, perhaps leading up to and following the company’s third-quarter earnings report on November 15th. Options volume is heaviest at the Nov. $8.0 strike where nearly 12,000 in-the-money puts changed hands against open interest of 8,333 positions this morning. Time and sales data suggests most of the volume was purchased for an average premium of $0.59 apiece. Put buyers may profit at expiration next month if MRVL shares decline another 2.5% to settle below the average breakeven price of $7.41.

 

Caitlin Duffy

Equity Options Analyst


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