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Options Radar: Avon Products, Inc., Dollar Tree, and Wynn Resorts

Reviewing notable options activity on Avon Products, Inc., Dollar Tree, Inc., and Wynn Resorts, Limited

by 7/28/2014 2:01 PM
Stocks quoted in this article:

Three stocks seeing notable options activity today are cosmetics concern Avon Products, Inc. (NYSE:AVP), discount retailer Dollar Tree, Inc. (NASDAQ:DLTR), and casino operator Wynn Resorts, Limited (NASDAQ:WYNN). Here's a look at how today's options traders have been placing their bets on these three names.

  • Ahead of Thursday morning's earnings report, shares of AVP were last seen 0.6% lower at $13.10 -- extending their year-to-date loss to nearly 24%. It could get even worse for Avon Products, Inc. in the wake of its earnings number, considering the stock has averaged a single-session post-earnings loss of 1.7% over the previous eight quarters -- including a 10.2% plunge this past May. Against this backdrop, it's not surprising to see puts trading at nearly 18 times the average intraday pace this afternoon, with buy-to-open activity detected at the October 11 strike.

  • DLTR's $8.5-billion bid for fellow discount retailer Family Dollar Stores, Inc. (NYSE:FDO) has shares of the former up 3.8% to trade at $56.26. In DLTR's options pits, overall volume is running at 43 times what's typically seen in this point of the day, and calls are outpacing puts by an almost 3-to-1 lead. Short-term contracts are in high demand, per Dollar Tree, Inc.'s 30-day at-the-money implied volatility, which has shot 52.5% higher to 26.8% -- in the 97th percentile of its annual range. Specifically, the stock's August 57.50 call is the most active strike, with all signs pointing to the purchase of new bullish positions.

  • Upbeat weekly gaming data out of Macau has sent shares of WYNN up 3% to linger near $210.56. The stock could be poised to extend these gains after it reports quarterly earnings tomorrow morning. Specifically, the equity has averaged a single-session post-earnings gain of 3% over the past eight quarters. Ahead of this scheduled event, WYNN options volume has accelerated to three times the intraday average, and the stock's September 220 call has seen the most action, with the majority of activity occurring on the long side. Profit will accrue with each step above the at-expiration breakeven mark of $223.89 (strike plus volume-weighted average price of $3.89) WYNN lands at the close on Friday, Sept. 19, while losses are capped at the premium paid, should the equity finish south of $220 at expiration.

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