Levi Strauss Put Options Active as Stock Sinks

The company expects slower sales growth in the latter half of 2019

Deputy Editor
Jul 10, 2019 at 10:27 AM
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The shares of denim name Levi Strauss & Co. (NYSE:LEVI) are tumbling down the charts today, after the firm's second-quarter earnings missed analysts' expectations. While the century-old company's revenue did come in higher than estimates, LEVI expressed concerns over slowing growth for the second half of the year, due to "bankruptcies and door closures" and tighter wallets, per CEO Chip Bergh. The shares are set to snap their six-day win streak, and options are flying off the shelves.

Specifically, LEVI is pacing for its worst day ever, down 12% at $20.81. Since going public back in March, the stock has managed to stay atop its initial public offering (IPO) price of $17, even during a dangerously close dip in late May. Since that all-time low of $18.92, the $20.40 area has emerged as a floor on the charts, and could contain today's slide.

While analysts have been relatively quiet on the stock so far, a round of downgrades could knock the stock even lower. Right now, LEVI boasts five "buy" or better ratings, compared to only three "holds." Plus, the consensus 12-month price target of $25 remains untouched by the security, as the equity peaked at $24.50 in mid-April, shortly after a post-earnings bull gap

Options traders are already piling on, too, with 5,200 puts traded already -- 39 times the average intraday put volume. Meanwhile, LEVI has seen nearly 4,300 calls exchanged, representing 13 times the average. Most active is the July 21 put, buyers of which expect the shares to extend their retreat south of $21 through the close on Friday, July 19, when front-month options expire.

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