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United Parcel Service, Inc. (UPS) Sees Rare Bearish Speculation

Put players take over UPS options pits during company's busiest week of the year

by 12/18/2013 1:59 PM
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Puts have emerged as the options of choice on United Parcel Service, Inc. (NYSE:UPS) today, as the package delivery company hurdles through Day 3 of " Peak Week." At last check, puts were trading at more than twice the typical intraday pace, and outnumbering calls by a margin of 2-to-1.

Most of UPS' put players have zeroed in on the December 100 strike, as close to two-thirds of the day's put volume changed hands here. Considering the majority of contracts crossed at the ask price, and implied volatility at this strike has increased, it is likely that a fresh batch of long positions was opened.

By placing these bearish bets, it appears today's speculators expect UPS -- perched at $101.85 -- to slide beneath the century mark (something the equity has not done on a daily closing basis since Nov. 12) by this Friday's close, when these puts expire. With delta for this option currently at negative 0.19, the put has about a 1-in-5 chance of finishing in the money.

Today's activity represents a change of pace from what is typically seen in United Parcel Service, Inc.'s (NYSE:UPS) options pits. The equity -- which is up 38.1% year-to-date -- sports a 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 3.04, which ranks in the 84th percentile of its annual range. In other words, UPS option traders have bought to open calls over puts at a much faster rate than usual during the past two weeks.


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