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Saturday, December 2, 2023

Traders Don Express Put Options Ahead Of Earnings Next Week

Today’s tickers: EXPR, ANF & YHOO

EXPR – Express, Inc. – Put options changing hands on Express today indicate some traders are bracing for the price of the underlying to potentially drop after the company’s second-quarter earnings report next Wednesday. The stock is currently down 5.0% at $19.50 as of 12:30 p.m. ET. Options traders positioning for shares to extend losses picked up more than 900 in the money puts at the Sep $20 strike during the first half of the trading session for an average premium of $1.13 each. The bearish contracts may be profitable at expiration next month should shares in Express drop more than 3.0% from the current price of $19.50 to breach the average breakeven point on the downside at $18.87. The cost of the $20 puts has increased sharply to $1.80 each this afternoon, moving inversely with the price of the underlying. The Sep $17.5 strike puts also attracted buyers, with more than 210 lots purchased this morning for an average premium of $0.40 per contract. Buyers of the $17.5 puts make money at expiration if shares in the retailer plunge 12% from the current level to trade below $17.10. Shares in EXPR last traded below $17.10 in April.

ANF – Abercrombie & Fitch Co. – Shares in teen retailer, Abercrombie & Fitch Co., are getting slammed on Thursday, dropping 21% during the first half of the session to a nine-month low of $36.71 after the company posted lower than expected second-quarter earnings and sales ahead of the opening bell. Sellers of weekly put options on the stock in the early going this morning are enjoying gains in the value of their positions, with the price of the underlying currently off its lowest level of the session to trade at $38.25 as of 12:15 p.m. ET. It looks like traders positioning for shares in the name to end the week off its lows sold more than 3,100 puts for an average premium of $0.97 each during the first 90 minutes of the session. The stock has since improved, and premium required to buy back the puts is currently hovering near $0.47 per contract just after midday in New York. Put sellers may walk away with the full amount of premium received at expiration as long as shares in ANF exceed the striking price of $37.50. Meanwhile, fresh interest in the Aug 23 ’13 $40 strike calls indicates some traders are positioning for the stock to rebound somewhat ahead of the weekend. It looks like traders snapped up more than 1,000 of the $40 calls for an average premium of $0.33 each. Call buyers may profit at expiration tomorrow in the event that Abercrombie’s shares jump more than 5.0% over the current price of $38.25 to top the average breakeven price of $40.33.

YHOO – Yahoo! Inc. – Shares in Yahoo are up more than 3.0% at $27.90 as of 11:45 a.m. ET on Thursday on reports the company had more visitors to its sites during the month of July than Google. Options traders positioning for Yahoo’s shares to extend gains heading into the weekend appear to be buying weekly calls on the stock. The most-traded weekly calls as of the time of this writing are the Aug 23 ’13 $28 strike contracts, with upwards of 2,000 lots in play versus open interest of 1,003 contracts. It looks like most of the volume was purchased during morning trading for an average premium of $0.14 each. Traders long the calls stand ready to profit at expiration should shares in YHOO rally another 0.90% to top the average breakeven price of $28.14. The Aug 23 ’13 $27.5 strike contracts are also active today with roughly 1,000 in the money calls purchased so far in the session for an average premium of $0.28 each. However, not all activity in the August 23 ’13 expiry contracts looks for the stock to end the week much higher than where it started trading on Monday. More than 1,400 of the Aug 23’ 13 $27.5 strike puts changed hands this morning, more than twice the 630 contracts in open interest. Time and sales data indicates most of the put options were purchased for a premium of $0.10 each, thus positioning put buyers to profit at expiration in the event that shares in Yahoo slip 1.8% from the current price of $27.90 to settle below the breakeven price of $27.40.



Caitlin Duffy
Equity Options Analyst

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