Option Bear Targets Bigger Livent Losses After Downgrade

BofA-Merrill Lynch downgraded LTHM to "underperform"

Aug 12, 2019 at 11:16 AM
facebook X logo linkedin


BofA-Merrill Lynch downgraded Livent Corp (NYSE:LTHM) to "underperform" from "neutral," and slashed its price target by $3 to $7. The analyst in coverage expects "challenged economics" as growth in electric vehicles will not be fast enough to absorb lithium hydroxide production. This comes as electric car maker Nio (NIO) earlier reported disappointing July delivery numbers, citing a challenging Chinese environment.

Against this backdrop, LTHM stock is down 13% at $6.60, headed for its worst day since May 8, when it shed 15.8% on a negative earnings reaction. This is just more of the same for the shares, which have surrendered 59% since opening at $16.25 in their Big Board debut back on Oct. 11. More recently, the equity's bounce off its Aug. 6 record low of $5.49 was quickly halted by its descending 80-day moving average.

The stock's sharp move lower has sent Livent options traders into overdrive. At last check, 6,171 puts were on the tape -- 293 times what's typically seen at this point, and a new record high. By contrast, fewer than 400 calls have traded, though still six times the expected intraday amount.

The bulk of the action has centered at the September 5 put, where it looks like one speculator bought to open a block of 5,300 contracts for an initial cash outlay of $74,200 (number of contracts * $0.14 premium paid * 100 shares per contract). This is the most the put buyer stands to lose, should LTHM settle above $5 at the close on Friday, Sept. 20, while profit will accumulate on a move below breakeven at $4.86 (strike less premium paid).

Today's bearish options activity could be the result of short sellers being sidelined in today's trading, with Livent stock landing on the short-sale restricted list out of the gate. The equity has been a popular target of short sellers, though, with the 20.08 million shares controlled by these bears representing almost 14% of LTHM's available float.

lthm stock daily price chart on aug 12

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI