WisdomTree Investments, Inc. (WETF) Options Active Ahead of Index Shake-Up

WisdomTree Investments, Inc. (WETF) will replace Qorvo Inc (QRVO) on the S&P MidCap 400 Index (MID)

by Andrea Kramer

Published on Jun 10, 2015 at 10:53 AM

ETF manager WisdomTree Investments, Inc. (NASDAQ:WETF) jumped to an all-time high of $23.06 out of the gate, thanks to an index shake-up. While Qorvo Inc (NASDAQ:QRVO) will replace soon-to-be bought Lorillard Inc. (NYSE:LO) in the S&P 500 Index (SPX) after tomorrow's close, WETF will replace QRVO in the S&P MidCap 400 Index (MID). Against this upbeat backdrop, option traders are scrambling to place bets on WETF. 

WETF was last seen 5.9% higher at $22.91. The stock has advanced more than 46% so far in 2015, but option players today are favoring long puts -- echoing the growing trend seen on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). In fact, WETF's 10-day put/call volume ratio of 14.48 stands higher than 79% of all other readings from the past year, reflecting a healthier-than-usual appetite for puts over calls during the past two weeks -- suggesting traders are either gambling on or hedging against a pullback. 

Today, WETF puts are running at twice the average intraday clip, and have outnumbered calls by a margin of about 9-to-1. Most of the action is attributable to a large sweep of July 22 puts that were apparently bought to open at a volume-weighted average price (VWAP) of $1.23.

If the buyer is "vanilla," his objective is for WETF to breach $20.77 (strike minus VWAP) by the close on Friday, July 17 -- when the options expire -- as the trade will begin to profit. If the buyer is a WisdomTree Investments, Inc. (NASDAQ:WETF) shareholder, he's hoping WETF extends its uptrend, but the puts lock in an acceptable exit price ($22), should the stock backpedal beneath the strike within the options' lifetime.


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earning announcements before it's too late!


  
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


With This Lithium Stock, It Will Be Better to Be Too Early Than Too Late
Click to continue to advertiser's site.
Tesla Drops Prices to Boost Demand
Tesla is cutting North American and Chinese prices by as much as 6%
DPZ Sizzles After Same-Quarter Sales Bounce
Comparable-store sales in the U.S. rose by 14% during the first two months of the current quarter
With This Lithium Stock, It Will Be Better to Be Too Early Than Too Late
Click to continue to advertiser's site.