The Well-Timed Under Armour Stock Options Trade

Under Armour stock was targeted for a suspicious put buy yesterday

Oct 24, 2017 at 10:58 AM
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Put volume was accelerated on Under Armour Inc (NYSE:UAA), with roughly 12,000 contracts traded -- more than two times what's typically seen in a typical trading session. Short-term contracts were being bought to open, and with UAA shares staging a sharp late-afternoon selloff, one of these bearish traders in particular placed a well-timed bet.

Diving deeper, the weekly 10/27 17.50-strike and weekly 11/3 16-strike puts were two of UAA's most active options on Monday -- both of which were bought to open, suggesting options traders are bracing for short-term struggles for the shares. However, it was a block of 2,000 weekly 10/27 17-strike puts that caught our eye.

These puts were bought to open around 1:41 p.m. ET for $0.28 apiece, making breakeven on the bearish trade $16.72 (strike less premium paid). While the stock was trading around $17.23 around the time of the trade, it went on to an intraday low of $16.80, after The Wall Street Journal reported co-founder Kip Fulks was taking a sabbatical, and the company is potentially considering exiting some of its smaller divisions, such as tennis or outdoor gear.

UAA shares went on to close the session at $16.85, but have resumed their decline today -- off 2% to trade at $16.52. As such, the bid price on the weekly 10/27 17-strike puts is currently docked at $0.65, meaning yesterday's options trader has already doubled their money.

This week's downside is nothing new for UAA stock, though. Year-to-date, the equity has plunged 43.2%, and hit a four-year low of $15.92 on Sept. 1. Not surprisingly, Wall Street is skeptical of the shares. While a healthy 12.6% of the stock's float is sold short, 28 of 33 analysts maintain a "hold" or "strong sell" rating on Under Armour shares.

 

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