Bears Pounce After Iconix Brand Group (ICON) CFO Resigns

Iconix Brand Group Inc (ICON) traders are buying May puts

by Griffin Kruse

Published on Mar 31, 2015 at 3:11 PM
Updated on Jun 24, 2020 at 10:16 AM

Iconix Brand Group Inc (NASDAQ:ICON) is 7.2% lower today at $33.77 -- putting the equity about 0.1% in the red year-to-date -- after the brand management firm announced the resignation of Chief Financial Officer Jeff Lupinacci. In light of this news, some speculators are betting on ICON to continue its downtrend, as put activity in the options pits is ramping up.

In afternoon action, puts are exchanging hands at 150 times the average daily rate. The day's most active contract by a landslide is the May 35 put, where buy-to-open activity has been uncovered. By purchasing this put, traders expect the security to continue its slide beneath the strike price through the close on Friday, May 15, when the option expires.

However, today's appetite for puts runs opposite the recent trend in the options pits. Before today, calls had been prominent, as ICON's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 9.47 stands in the 77th percentile of its annual range. Echoing this indicator is the security's Schaeffer's put/call open interest (SOIR) ratio of 0.26, which ranks lower than 80% of all equivalent readings taken over the past year. Simply stated, near-term traders are more call-heavy than usual.

Elsewhere, short sellers have taken a shine to Iconix Brand Group Inc (NASDAQ:ICON), as 33.4% of the stock's available float is sold short. What's more, it would take these speculators over four weeks to cover their bets, at average trading volumes. Against this backdrop, it's possible that some of the recent call buying could be attributable to shorts looking for a hedge. Meanwhile, the brokerage bunch is mostly bullish on ICON, as four out of five covering analysts rate the stock a "strong buy," with no "sell" or worse recommendations to be found.

Daily Chart of ICON Since October 2014

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