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In spite of its year-to-date gain of nearly 36% and hitting a 52-week high of $78.29 during intraday trading, Tiffany & Co. (NYSE:TIF) saw one detractor come out in force on Friday. The item of interest was the August 70 put, where more than 4,000 options changed hands -- by far the session's most active option for the fine jeweler. Almost all of the puts traded in one large block at the ask price of $1.54, and open interest at this strike surged by more than 3,800 contracts over the weekend, confirming buy-to-open activity.
By purchasing the puts to open, Friday's bear is expecting Tiffany & Co. to fall to $68.46 (strike price minus the premium paid) from its week-end close of $78, by August expiration -- that's a slide of just over 12%. In other words, the trader would profit with each step south of that price.
Taking a step back, over the past ten weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have purchased 14,980 puts, compared to 11,837 calls, for a 50-day put/call volume ratio of 1.27. This abundance of pessimistic bets -- particularly within the June series of options -- could end up translating into options-related support down the road.
Meanwhile, short interest on Tiffany & Co. shares makes up a sizeable 6.4% of its available float, which would take nearly eight sessions to cover, at the security's average daily trading volume. Still, short interest has fallen over 24% over the past month -- a sign that some bears have already capitulated in response to TIF's impressive run.
As I mentioned earlier, Tiffany & Co. (NYSE:TIF) has been on a technical tear in 2013, and has support from its positively trending 10-day moving average. Should that pattern continue through August, Friday's big trader would lose the premium he paid to initiate his long put position.