Bears prepare for Kimberly Clark to head lower

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Kimberly-Clark is flagging after a big run, and the bears think it's ready to roll over.

optionMONSTER's Depth Charge monitoring system detected the purchase of about 5,500 October 85 puts for $3.20 to $3.60. Volume was almost 7 times open interest at the strike.

KMB fell 0.30 percent to $83.24 in early afternoon trading. The maker of products like Kleenex tissues and Huggies diapers rallied more than 20 percent between March and earlier this month, when it hit an all-time high of $88.25.

Shares fell hard after hitting that peak and has been drifting since. The stock appears to be consolidating below its 50-day moving average as well, which could make some chart watchers think a drop is coming.

Those puts bought today are in the money, which makes them highly leveraged to downside in the stock. They have a delta of -0.75, which means they will appreciate $0.75 for every $1 that KMB declines. If it drops just 5 percent, for example, those contracts will roughly double in value.

Overall option volume is more than triple the daily average today, with puts accounting for almost three-quarter of the activity.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: KMB

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