Louisiana-Pacific Corp. (NYSE: LPX ) August 9 calls were active out of the gate on Friday. Sound familiar? ONN covered a bullish call buyer in the same strike on Monday, and the options action on the tape today suggests the same investor closed the long position at a loss.
At 9:37 a.m. EDT, two equal blocks totaling 25,000 front-month August 9 calls changed hands versus current open interest of 26,000 contracts. One block traded for 10 cents per contract while the other traded for five cents per contract; both prices were closer to or at the bid price when the volume hit the tape.
This options action suggests the investor collected a total of roughly $250,000 in total to close these long call positions. The original trade cost the investor a net debit of 35 cents per contract. Assuming that the volume of each trade is equal, the investor took a total loss of $625,000 to close the initial position.
Why did the loss occur? The breakeven on the initial long call position was $9.35. LPX shares have not come close to trading higher than $9 since May, and the company's worse-than-expected earnings announcement ahead of the bell this morning probably won't assist in any potential upside. LPX announced earnings of 17 cents per share and missed estimates by two cents.
LPX shares were trading down nearly 6% to $7.53 as of 11 a.m. EDT after spending the greater part of the morning session even further in the red. The stock is trading closer to its 52-week low of $4, and at least one investor appears to have closed out a bullish position on a bet that the stock will continue to drop during the near term.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.