IB Options Brief: CarMax, Inc. (KMX) & Newell Rubbermaid, Inc. (NWL)
KMX ñ CarMax, Inc.
The retailer of used automobiles is weathering Wednesdayís pullback in equities far better than some of its competitors, although KMX shares too are on the decline today to stand 0.45% lower on the day at $32.99 as of 11:30 am ET. Rival AutoNationís shares dropped as much as 5.1% earlier in the session to $37.94 despite reporting better-than-expected second-quarter earnings ahead of the bell this morning. Activity in CarMax put options suggests some bearish players expect the price of the underlying to continue to decline in the near term.
Investors exchanged more than 5,500 puts at the August $31 strike against open interest of just 259 contracts. It looks like around 5,000 of the contracts were purchased at an average premium of $0.53 apiece. Put buyers profit if shares in KMX drop 7.6% from the current price of $32.99 to breach the average breakeven point on the downside at $30.47 by August expiration. Shares in CarMax last traded below $30.47 on June 21.
The stock lost nearly 30% of its value between mid-February and early-June, dropping from a 52-week high of $37.02 down to a 6-month low of $26.37. The weeks leading up to and following second-quarter earnings from KMX on June 22 saw shares rebound to as high as $34.81 in July. Put buyers may profit if shares in CarMax surrender recent gains by expiration next month.
NWL ñ Newell Rubbermaid, Inc.
Second-quarter results from the global consumer products company are just two days away, and it looks like some investors are taking to the options market to position for shares in Newell Rubbermaid to rally. Shares in the marketer of brands, including Sharpie and Paper Mate, fell 2.8% to $14.68 in early-afternoon trade.
Bullish strategists traded more than 2,700 calls at the August $15 strike this morning against previously existing open interest of 242 contracts. It looks like the bulk of the calls were purchased for an average premium of $0.55 a-pop.
Call buyers profit in the event that NWL shares surge 5.9% to surpass the average breakeven price of $15.55 by expiration day in August. The overall reading of options implied volatility on the stock rose 15% to 37.95% by 12:10 am in New York trade. Newell Rubbermaid is slated to report earnings ahead of the opening bell on Friday.
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