How one trader is hedging Conn's
David Russell | [email protected]
optionMONSTER's Depth Charge monitoring program detected the purchase of 2,650 December 50 puts for $4.10, while equal amounts were sold in the December 50 puts for $1 and the December 70 calls for $1.57. Volume was more than twice the previous open interest at all three strikes, indicating that new positions were implemented.
The trader paid $1.53 and will collect $10 if CONN closes at $50 or lower on expiration. Earnings results come out on Dec. 5, so these options are probably being used to hedge a long position. The electronics retailer fell 12 percent after its last quarterly report on Sept. 5, with increased delinquencies hurting profit.
The trader must also sell shares for $70 if they go over that price, but he or she would probably be willing to do that because it's less than $1 above the all-time high. (See our Education section)
CONN fell 0.51 percent to $60.20 on Friday and has more than doubled in the last year. Total option volume was 5.5 times greater than average in the session, according to the Depth Charge.