Lender Processing Services has been trending lower for almost a
year, and the bears went after the name once again last week.
optionMONSTER's Depth Charge tracking program detected the purchase
of about 8,000 December 30 puts, most of which priced for $1.20 and
$1.25, against open interest of just 110 contracts.
The stock was sold heavily about two after the trades appeared,
falling from about $32.50 to about $30.80. It would then rebound
slightly but end Friday down 5.27 percent at $31.48.
LPS, which provides software and services to the mortgage industry,
peaked above $44 in October 2009 and has been making steadily lower
lows and lower highs since then. The last time it reported earnings
on July 22, management cut its full-year revenue forecast and
issued a weak outlook for the third quarter.
It gapped lower on that news, made a new low, and then rallied back
before rolling over once again. The fact that it only partly filled
the July 22 gap before reversing could be interpreted by some chart
watchers as evidence that the bearish trend remains intact.
LPS must fall another 9 percent by expiration for the puts to turn
It was the second straight day of downside activity in the stock.
On Thursday about 9,400 March 30 puts were purchased for $2. Those
same contracts appreciated to about $2.30 the next day.
Overall option volume in LPS was 24 times greater than average on
Friday, with puts accounting for a bearish 99 percent of activity.
The next earnings report is scheduled for before the bell on Oct.
(Chart courtesy of tradeMONSTER)
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