Bears Make a Play On Dick's Sporting Goods Inc (DKS)

Traders yesterday anticipated a post-earnings swoon at Dick's Sporting Goods Inc

Digital Content Group

Nov 18, 2014 at 10:28 AM

Ahead of Dick's Sporting Goods Inc's (NYSE:DKS) turn in the earnings confessional this morning, options traders were extremely busy. Yesterday, in fact, puts were exchanged at seven times the norm, while call volume doubled the average daily amount.

Digging deeper, DKS' most active strike on Monday was the November 45 put, where buy-to-open activity could be detected. By scooping up the long puts, these traders are expecting the shares to drop below $45 by the end of this week, when the front-month options expire. Gains will accrue on a move down to zero, while the maximum potential loss is capped at the initial premium paid, should DKS maintain its perch atop $45 through Friday's close.

As alluded to earlier, DKS disclosed its third-quarter earnings report earlier, and the results were mixed. Earnings fell 1.5% year-over-year, but were still at the higher end of the company's guidance, and in line with the Street's consensus estimate.

That said, shares of Dick's Sporting Goods Inc (NYSE:DKS) are unchanged from Monday's close, at $47.51. However, delta on the aforementioned put has dropped to negative 0.12 from negative 0.26 last night, with the potential catalyst now in the rearview.

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