ViewRay Option Bear Makes Millions Overnight

VRAY stock is plummeting after earnings, and one trader could cash in

Aug 9, 2019 at 11:42 AM
facebook twitter linkedin


The shares of ViewRay (NASDAQ:VRAY) are getting destroyed today, after the radiation therapy concern reported a steeper-than-expected quarterly loss and cut its full-year sales guidance. The firm also announced the departure of CFO Ajay Bansal. At last check, VRAY stock was down 55.5% at $3.00 -- and it looks like one options trader placed a well-timed bearish bet on the shares yesterday.

ViewRay shares are pacing for their worst session ever, and earlier fell to a new two-year low of $2.89. VRAY stock is also set to end well south of recent support in the $6.50 region, which contained an early May pullback. However, the equity has been in a free-fall since skimming the $9.75 level on July 23, and just yesterday snapped a six-day losing streak.

VRAY stock chart aug 9

As alluded to earlier, VRAY options were hot yesterday, with about 11,000 puts traded -- 35 times the average daily volume, and representing a new annual high. Calls also ran hotter than usual, with 3,750 traded -- 26 times the norm.

Most popular was the August 6 put, which saw close to 11,000 contracts change hands -- nearly all of which translated into new positions. In fact, just minutes before yesterday's closing bell, one trader bought to open a block of 10,000 August 6 puts for $0.30 each, or $300,000 total (premium paid x number of contracts x 100 shares per contract). The speculator would make money if VRAY shares fell below $5.70 (strike minus premium paid) by the close on Friday, Aug. 16, when front-month options expire.

Those puts are now deep in the money. Specifically, the puts were last bid at $2.95. If yesterday's buyer were to cash out now, their position would be worth a cool $2.95 million ($2.95 x 10,000 contracts x 100 shares per contract). And even subtracting the $300,000 paid to buy the puts, the trader would still make a cool profit of 883%!

Outside of the options pits, VRAY could be vulnerable to more analyst backlash. Already this morning, Guggenheim and Mizuho cut their price targets on the equity to $8 and $9, respectively. Still, the consensus 12-month price target of $9.90 represents a premium of 239% to VRAY's current price. In addition, seven of the eight analysts following the shares had "strong buy" opinions ahead of earnings.

 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

Schaeffer's Investment Research Master Portfolio Trial
 


 


 
Special Offers from Schaeffer's Trading Partners