IB Options Brief: Nu Skin Enterprises, Inc. (NUS) & Red Hat, Inc. (RHT)
NUS ñ Nu Skin Enterprises, Inc.
Bearish activity in Nu Skin Enterprises, Inc. options is on the rise this morning with shares in the maker of anti-aging skin products and other personal care items trading down 4.4% at $56.85 as of 11:15 a.m. in New York. Traders picking up $55 strike put options in April and May today appear to be positioning for the price of the underlying shares to extend losses in the near term.
Front month $55 puts changed hands more than 800 times in the first half of the session against open interest of 55 contracts. Put players purchased the majority of the puts for an average premium of $1.15 apiece, with profits available on the position in the event that shares in Nu Skin drop another % to trade below the breakeven price of $53.85 by expiration.
Volume of 1,500 puts exchanged at the May $55 strike is almost twice that of the same-strike options expiring in April. It looks like most of the May expiry puts were purchased for an average premium of $2.30 per contract. Traders long the puts profit at expiration if shares in Nu Skin Enterprises decline 7.3% to breach the average breakeven point on the downside at $52.70. The skincare products provider is scheduled to report first-quarter earnings on May 3rd.
RHT ñ Red Hat, Inc.
Better-than-expected fourth-quarter results from the maker of Linux software blew the lid right off Red Hatís prior 52-week high of $54.01, as investors sent the stock up 18.0% to $60.62, the highest share price in more than a decade. Options on Red Hat lit up with activity straight out of the gate this morning, with more than 35,500 contracts having changed hands so far today versus the stockís 90-day average options volume of 4,383 contracts.
Traders eyeing further upside potential on the shares looked to the April $60 and $65 strike calls. More than 4,100 in-the-money calls traded at the April $60 strike against open interest of 538 positions, with much of the volume generated by buyers paying an average premium of $1.26 apiece. Traders paid an average of $0.36 per contract for more than 1,000 calls at the higher April $65 strike, which may pay off at expiration in the event that Red Hatís shares rally another 7.8% over todayís high to surpass the average breakeven share price of $65.36.
Note: The material presented in this commentary is provided forinformational purposes only and is based upon information that isconsidered to be reliable. However, neither Interactive Brokers LLC norits affiliates warrant its completeness, accuracy or adequacy and itshould not be relied upon as such. Neither IB nor its affiliates areresponsible for any errors or omissions or for results obtained from theuse of this information. Past performance is not necessarily indicativeof future results.
This material is not intended as an offer or solicitation for thepurchase or sale of any security or other financial instrument.Securities or other financial instruments mentioned in this material arenot suitable for all investors. Any opinions expressed herein are givenin good faith, are subject to change without notice, and are onlycorrect as of the stated date of their issue. The information containedherein does not constitute advice on the tax consequences of making anyparticular investment decision. This material does not take into accountyour particular investment objectives, financial situations or needsand is not intended as a recommendation to you of any particularsecurities, financial instruments or strategies. Before investing, youshould consider whether it is suitable for your particular circumstancesand, as necessary, seek professional advice.
View Caitlin Duffy's post archive >