SHLD – Sears Holdings Corp. – Options volume on Sears today rose well above the average daily level for the stock during morning trading, with the bulk of the activity concentrated in far out of the money Jan 2014 expiry puts. Overall volume on the stock is approaching 30,000 contracts just before midday in New York, roughly 155% of SHLD’s average daily options volume of around 18,000 contracts. Shares in Sears are off 0.70% at $46.54 at present, off earlier session lows that saw the stock touch down to $45.98, the lowest level since September 5th.
Upwards of 22,000 of the Jan ’14 $39 puts have traded thus far in the session, with the bulk of the volume in one print of around 16,380 contracts that appear to have been purchased at a premium of $1.55 each just after 10:00 a.m. EST. Open interest in the $39 puts is just a fraction of today’s volume at 1,030 contracts. The put contracts look for shares in Sears to extend losses during the next five weeks to expiration. The puts may be profitable at expiration next year if shares in Sears drop roughly 20% from the current level of $46.54 to trade below the breakeven point at $37.45. Shares in SHLD last traded below $37.45 back in January of 2012.
