Blue Nile is getting crushed today, but some traders apparently
think that the move is overdone.
optionMONSTER's monitoring systems detected the sale of more than
5,000 December 22.50 puts against open interest of just 328
contracts. Premiums fell from $1.15 to $1 as the trades crossed,
which reflects the strong selling pressure.
NILE is down 30 percent to $34.11 nearing midday after reporting
third-quarter earnings of just $0.13 yesterday, missing the $0.18
consensus forecast. The online jewelry retailer also issued weak
profit guidance and said CEO Diane Irvine was stepping down.
Strangely, revenue was better than anticipated and is expected to
remain strong going forward. Management didn't immediately explain
the margin deterioration.
The stock appears to be holding the same level where it bounced in
September and October, which could lead some chart watchers to
believe that long-term support is in place. That could be the
rationale behind today's
If NILE stays around its current level or even pushes slightly
lower, those contracts will quickly lose value and expire
worthless. It's a classic example of
, designed to profit from today's panic spike. (See our
Overall option volume in NILE is 17 times greater than average so
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