One investor doesn't expect much of a bounce from Hanesbrands.
optionMONSTER's tracking systems detected the sale of 16,000 January 22.50 calls for about $0.77 against previous open interest of 10,293 contracts yesterday. The trade obligates the trader to sell shares for the strike price.
HBI rose 0.45 percent to $22.49 yesterday but has been bleeding lower for months. The declines started on July 20, when higher cotton prices caused the underwear company management to issue a weak profit outlook. Shares are down by more than 30 percent since then and are now sitting near their lowest price in almost two years.
Yesterday's option trade was probably the work of an investor trying to manage a long position in the stock. He or she has effectively agreed to unload shares for $23.27 if HBI closes above $22.50 on expiration, while the credit received cuts their downside risk. (See our Education section)
The transaction pushed total option volume to 19 times greater than average in the session.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.