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Unusual Put Activity on URBN, CSTR, GT, and TTWO

Put buyers bombarded CSTR, put sellers hit URBN and GT, and an anti-volatility strategist centered on TTWO

by 11/14/2011 10:25 AM
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Among the equities attracting put players on Friday were kiosk concern Coinstar, Inc. (CSTR - 45.58), retailer Urban Outfitters, Inc. (URBN - 26.66), gaming guru Take-Two Interactive Software, Inc. (TTWO - 14.86), and tire titan Goodyear Tire & Rubber Company (GT - 13.88). Here's a quick roundup of some of the most popular put trades of the day:

  • First up, CSTR saw roughly 6,600 puts cross the tape -- more than double the norm. Digging deeper, it appears speculators were adding new positions at the out-of-the-money December 42.50 strike, which saw open interest jump by more than 3,500 contracts over the weekend. Plus, 98% of the back-month puts traded at the ask price, suggesting they were bought. By purchasing the puts to open, the buyers are betting on CSTR to breach the $42.50 level within the next several weeks.
  • Meanwhile, URBN was popular among put players ahead of its turn in the earnings spotlight today. However, it appears traders were selling to open the near-the-money November 26 and 27 puts, which saw about 2,300 and 2,400 contracts traded, respectively. A healthy portion of the puts changed hands at the bid price, and put open interest increased at both strikes overnight. By writing the puts to open, the sellers are expecting URBN to remain north of the respective strikes through the end of the week, when November-dated options expire.
  • Moving on, TTWO was actually a favorite on both sides of the options aisle on Friday, with about 11,000 puts and 11,000 calls exchanged. In fact, it appears a notable chunk of the volume was attributable to an anti-volatility play. Specifically, it looks like the trader initiated a short strangle by selling to open the January 14 puts and January 15 calls. As such, the speculator is expecting TTWO to remain pinned between the $14 and $15 levels through January options expiration, in which case all of the options will expire worthless.
  • Finally, GT saw roughly 10,000 puts cross the tape on Friday -- almost three times its average daily put volume. Most active was the in-the-money January 2013 15-strike put, which saw open interest skyrocket by close to 3,200 contracts over the weekend. However, as with URBN, the majority of the LEAPS crossed at the bid price, hinting at seller-oriented volume.


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