AVP – Avon Products Inc. – Options volume on cosmetics company Avon Products is roughly twice the stock’s average daily level as of 11:00 a.m. ET on Thursday morning, with shares in the name tanking after the company reported a surprise third-quarter loss. The stock is down 23% as of the time of this writing to stand at $17.20, the lowest level since February.
Trading in November expiry put options this morning indicates some traders are positioning for shares in the door-to-door cosmetics seller to extend losses in the near term. The Nov $16 and $18 strike puts were the most traded front month contracts in the early going, with upwards of 900 contracts changing hands at each strike. It looks like traders purchased most of the volume, buying most of the $16 strike puts for a premium of $0.15 each and the $18 strike puts at a premium of $0.60 apiece. Traders long the $18 puts stand ready to profit at expiration in the event that shares in AVP settle below the breakeven price of $17.40, while buyers of the $16 strike puts look for shares in the name to plunge 8.0% from the current level to settle below $15.85.
OSK – Oshkosh Corp – Shares in the manufacturer of specialty trucks and vehicles are getting hit hard today, down as much as 13.4% to $45.66 during the first half of the trading session after Oshkosh Corp reported fourth-quarter earnings and sales that missed analyst estimates.
Bearish options trades initiated on Wednesday prior to the company’s earnings report this morning appear to be paying off for some traders. The Nov $50 strike puts traded more than 1,600 times yesterday, with much of the volume purchased for an average premium of $0.85 each. The sharp drop in OSK shares overnight has lifted the value of the $50 puts more than four-fold to the last-traded price of $4.00 as of 11:40 a.m. in New York trading. Approximately 1,700 of the Nov $50 puts have changed hands today, perhaps as some traders take profits off the table.
