Orbital ATK Inc (OA) Options Explode Following Fundamental Folly

Orbital ATK Inc (OA) is staring at its worst single-day performance in a year, after the company delayed its quarterly filing

by Alex Eppstein

Published on Aug 10, 2016 at 2:16 PM

Orbital ATK Inc (NYSE:OA) shares are being decimated, after the aerospace firm delayed its second-quarter filing due to an accounting issue, and said it will need to restate previous financial statements. As the stock plummets, its options volume is soaring -- especially on the put side of the aisle.

By the numbers, more than 2,300 put options are on the tape -- 123 times the expected intraday amount. In the lead is the September 65 put, where speculators are buying to open out-of-the-money positions in the hopes of extended downside through the close on Friday, Sept. 16. This uptick in bearish options bets isn't particularly surprising, as traders may be seeking alternate ways to wager against OA, since it's on the short-sale restricted list.

In recent weeks, though, put buying has been scarce across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, looking back two weeks, nearly 1,400 long calls have been initiated versus just one put.

Optimism has been brimming among the brokerage bunch, too. Heading into today's session, six of seven analysts rated OA a "strong buy," with not a single "sell" opinion to be found. That said, the stock's rating was just lowered to "market perform" from "outperform" at Cowen, which also slashed its price target to $76 from $93.

As we've mentioned, Orbital ATK Inc (NYSE:OA) shares are collapsing this afternoon, last seen nearly 21.7% lower at $69.53 -- making it the second-worst performer on the New York Stock Exchange (NYSE). This would also represent the stock's biggest single-day percentage decline in roughly a year. Currently, OA is staring at what would be its lowest close in over 12 months. 

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