Lender Processing Services has been a weak name in a bad sector,
and one trader apparently thinks that the bottom might fall out.
optionMONSTER's Depth Charge tracking system detected the purchase
of about 5,000 September 25 puts for $1.80 against open interest of
just 131 contracts. The activity occurred two sessions before the
company's first-quarter earnings report, scheduled for Thursday
LPS rose 0.5 percent to $28.28 yesterday but has been steadily
trending lower since late 2009. The company, which processes
mortgages and provides services to banks, has issued weak guidance
at least twice since October and management has been targeted in
several shareholder lawsuits.
The stock is now sitting at its lowest level since November.
Judging by yesterday's option action, investors may fear that a bad
earnings report will send it through that support level to prices
last seen at the nadir of the 2008 financial crisis.
Overall option volume in LPS was 25 times greater than average in
the session, with puts outnumbering calls by the same amount.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.