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Saturday, December 2, 2023

Hewlett-Packard Put Options In Focus

Today’s tickers: HPQ, YHOO & DSW

HPQ – Hewlett-Packard Co. – Trading in January 2014 expiry put options on HPQ this morning suggests one strategist may be positioning for shares in the tech giant to weaken further during the next five months. Shares in Hewlett-Packard Co. are off their lows of the session, down 0.40% at $22.18 as of 12:10 p.m. ET. The stock has dropped 20% since the beginning of August, though shares are still up more than 50% year to date. One trader bracing for shares to move lower appears to have purchased 6,000 in the money put options at the Jan 2014 $24 striking price at a premium of $3.20 per contract. The puts make money at expiration if shares in HPQ decline another 6.0% from the current price of $22.18 to breach the effective breakeven point on the downside at $20.80. Shares in the name last traded below $20.80 at the end of May.

YHOO – Yahoo! Inc. – Weekly options changing hands on Yahoo today suggest some traders are positioning for a near term pop in the price of the underlying, while other strategists brace for selling pressure to persist during the next few trading sessions. Shares in YHOO are down 2.0% at $27.15 as of 12:30 p.m. ET. Options players looking for shares in the name to rebound appear to have purchased more than 400 in the money calls at the Aug 30 ’13 $27 strike for an average premium of $0.42 apiece. Call buyers may profit at expiration this week if shares in Yahoo rise 1.0% over the current price of $27.15 to settle above the average breakeven price of $27.42. Conversely, traders snapping up more than 750 of the Aug 30 ’13 $26.5 strike put options for an average premium of $0.08 per contract today are prepared to profit in the event that Yahoo’s shares slip another 2.7% to $26.42 ahead of the long weekend. 

DSW – DSW, Inc. – Shares in shoe and accessory retailer, DSW, jumped 9.0% to a record high of $88.73 on Tuesday after the company posted better than expected second-quarter earnings ahead of the opening bell. Options traders positioning for shares in the name to extend gains during the next few weeks appear to be buying out of the money calls on the specialty retailer today. Bulls looked to the Sep $95 calls, buying more than 400 contracts for an average premium of $0.30 apiece during the first half of the session. Traders long the $95 calls stand ready to profit at expiration next month in the event that DSW’s shares rally more than 7.0% over today’s all-time high of $88.73 to exceed the breakeven price of $95.30. Overall options volume on DSW is approaching 3,500 contracts as of midday in New York, more than four times the stock’s average daily volume of around 775 contracts. 


Caitlin Duffy
Equity Options Analyst

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