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Option Brief: Volume has accelerated in The Clorox Co's (NYSE:CLX) options pits this afternoon. This is especially true on the call side, where 24,000 contracts have traded -- 86 times the usual intraday amount. Short-term contracts are in demand, too, as evidenced by the stock's 30-day at-the-money implied volatility (IV), which has spiked 80.4% to 19.8%.
Most active is CLX's July 95 call, which has seen over 14,500 contracts -- including a block of nearly 3,000 -- change hands. The majority crossed at the ask price, IV is trending higher, and volume outstrips open interest by a roughly 15-fold margin -- collectively suggesting the contracts were bought to open. This theory is supported by data from Trade-Alert.
By scooping up the calls at a volume-weighted average price (VWAP) of $0.72, the buyers anticipate CLX shares will rally above $95.72 by the closing bell on Friday, July 18, when back-month options expire. Additional gains will accumulate north of that breakeven point, whereas the most the traders stand to lose is the initial premium paid, should the stock be sitting below the strike at expiration.
On the charts, The Clorox Co (NYSE:CLX) is up nearly 3% today at $92.13, but remains in negative territory year-to-date. Elsewhere, on the sentiment front, 10% of the equity's float is sold short. Therefore, it's possible some of today's call buyers are short sellers in disguise, picking up the contracts to serve as short-term insurance against continued gains.