Market News

December 28, 2016  Wed 7:21 AM CT

Mattel is drawing bearish option activity amid growing complaints over one of its hottest toys this holiday season.

Customers said they have encountered technology problems with the Barbie Dream House, which retails for $300. The playset, with its own app and its voice-operated controls, was designed to be a major step by the toy maker into the digital realm.

Our tracking systems detected the purchase of more than 5,000 January 27.50 puts for $0.55 to $0.67 yesterday. This clearly represents fresh buying, as open interest in the strike was a mere 5 contracts before the session began.

Long puts lock in the price where a stock can be sold, so they make money if shares decline. Investors use them to hedge long positions or to speculate on a drop. These contracts are safer than shorting a stock directly, as the options limit the amount of cash that can be lost if shares rally. (See our Education section)

MAT fell 1.8 percent to $27.83 yesterday and is down 11 percent in the last month. The company reported bullish quarterly results on Oct. 19 and is expected to release its next earnings numbers after the close on Feb. 1.

Overall option volume in the name was 6 times greater than average yesterday. Puts outnumbered calls by a bearish 3-to-1 ratio.

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