PetSmart reports earnings after the bell today, but one big
investor is selling this morning.
optionMONSTER's tracking systems detected the sale of 2,000
December 35 calls for $3.40 against open interest of just 123
contracts. The transaction pushed total options volume in the
specialty retailer to 9 times greater than average.
PETM is up 0.85 percent to $37.99 in morning trading. While the
stock is up 28 percent in the last three months, it's been dropping
quickly since it hit an all-time high of $39.54 on Nov. 11.
The company issued bullish guidance the last time it released
earnings on Aug. 19 and has a track record of making big moves in
conjunction with financial results. Last week an investor purchased
a December 35/40 strangle, betting that PETM would gap higher or
lower on the news.
Today's activity was probably the work of a shareholder who thinks
that upside will be limited through December expiration. Selling
calls let him or her generate extra premium, giving them an
effective exit price of $38.40. (See our Education section for more
on how investors can write calls to generate income and manage
existing portfolio positions.)
(Chart courtesy of tradeMONSTER)
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