Put Players Pounce on Raytheon

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Puts were the options of choice on Raytheon Company (RTN - 42.88) Friday, with more than 6,400 contracts crossing the tape. This activity quadrupled the equity's average daily put volume. On the other hand, fewer than 2,400 calls changed hands during the session.

This inclination for bearish bets is backed by data from the International Securities Exchange (ISE), Chicago Board Options Exchange ( CBOE ), and NASDAQ OMX PHLX (PHLX). Speculators on these exchanges bought to open 2,603 puts on RTN Friday, compared to just 10 calls, which gave the shares a single-day put/call volume ratio of 260.30.

The stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 6.17 confirms that puts bought to open have easily outnumbered calls during the past two weeks. This ratio sits just four percentage points from an annual high, signaling that traders on these exchanges have rarely purchased bearish bets over bullish at a faster pace over the past year.


Elsewhere on the Street, short interest on RTN rose 2.1% over the most recent reporting period, but these pessimistic positions account for 1.8% of the equity's float. At RTN's average pace of trading, it would take two sessions to cover these shorted shares.

Thanks to the sell-off in the wider equities market , RTN is down about 2.5%, deepening its 5.1% year-to-date deficit. Currently, the shares are trading below their 100-day moving average but they're now testing support at the $42 level. This former area of resistance has acted as a technical floor since mid-October.

Daily

However, should RTN extend its long-term retreat, there could be analyst downgrades in store. According to Zacks, there are eight "buy" or better endorsements, 10 "holds," and not a single "sell" in sight.

Considering RTN's lackluster technical performance, a submission by any of these bullish holdouts could knock the security lower in the near term.



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.

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.


This article appears in: Investing , Options

Referenced Stocks: CBOE , RTN

Schaeffer's Investment Research

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