Bullish Option Activity Alert: AVP
Bullish Option Activity Alert: AVP
Itís been a rough day for door-to-door cosmetic seller Avon Products, Inc. (AVP) with the company posting Q3 earnings this morning that missed estimates by 17% and announcing the SEC is investigating its contracts with financial analysts. The shares are currently trading 17% lower and are flirting with their 52 week low. Option volume is already 10 times the companyís average daily activity with the most notable trading carrying a long term Bullish sentiment. The January í13 20 strike Calls have seen more than 6,000 contracts cross the tape and, with 85% of the trades taking place on the offers and little current open interest, it appears to be opening buyers looking for the stock to climb above the $22.20 price level during 2012.
The shares traded down to this level in early October and rallied as high as $23.94, through the breakeven point for todayís option trade, in a matter of weeks. Todayís option buyer maybe looking for this price level to hold again and, by purchasing long dated options, is able to participate in any upside in the shares over the next year without having to lay out the capital needed to buy the stock as well as limiting their downside risk.
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About Patrick (Rick) Mortimer
Patrick(Rick)Mortimer is the Director of Options Trading at Pipeline Trading Systems LLC. With over 25 years of options trading experience as a Broker/Market Maker on the Philadelphia Stock Exchange he now provides daily insight into today’s complicated world of equity options trading. His daily alerts and commentary are valued by institutional asset managers and hedge funds and he is often quoted by well known financial news providers such as Bloomberg, CNBC, and Reuters. Pipeline’s equity and options clients have found his analysis useful in providing option strategy’s to increase alpha for current equity holdings as well as forecasting directional stock movement based on the underlying option activity.
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