Avon Products has been languishing after a big drop, and one
investor is still worried about further downside.
optionMONSTER's Depth Charge tracking system detected the purchase
of 9,100 January 28 puts for $0.75 and the sale of 9,100 December
28 puts for $0.10. Volume was below open interest in the December
contracts, suggesting that an existing position was rolled from one
month to the next.
The trade provides an additional month of protection at a net cost
of $0.65. Making the move now lets the investor receive something
for the puts already owned. Given that December expiration is less
than two weeks away, those contracts will lose value at an
accelerating pace in coming sessions.
AVP is off 0.1 percent to $29.22 in midday trading. It gapped lower
after a bad earnings report on Oct. 28 and has been stuck around
the $29 level since. The cosmetics company is struggling to
maintain its sales and didn't seem to get much benefit from
increased marketing campaigns in the last quarter.
The shares are now consolidating below their 200-day moving
average, which some chart watchers may consider a prelude to
Total option volume in AVP is 5 times greater than average today,
with puts accounting for 96 percent of the activity.
(Chart courtesy of tradeMONSTER)
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