Under Armour Bears Bet on a Quick Reversal

Put buying has been popular on UAA in recent weeks

Sep 25, 2019 at 2:48 PM
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Under Armour Inc (NYSE:UAA) stock is trading up 1.7% at $19.73, getting a lift from Nike's (NKE) impressive turn in the earnings confessional. This puts UAA on track for its second win in nine sessions, but a number of options traders don't think these gains will last.

With about 90 minutes left in today's trading, around 1,600 UAA puts have changed hands -- 1.4 times what's typically seen at this point. The weekly 9/27 19.50-strike put is most active, and it looks like new positions are being purchased here for a volume-weighted average price of $0.19. If this is the case, breakeven for the put buyers at the close this Friday, Sept. 27, is $19.33 (strike less premium paid).

Under Armour has already been a popular target for put buyers. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 1.07 ranks in the 74th annual percentile, meaning long puts have been initiated over calls at a faster-than-usual clip.

Skepticism has been growing elsewhere on Wall Street, too, with short interest up 1.2% in the two most recent reporting periods to 37.5 million shares. This represents roughly one-fifth of Under Armour's available float, or 8.1 times the average daily pace of trading.

Taking a closer look at the charts, UAA shares sold off sharply after hitting a two-year peak at $27.72 in late July, falling as low as $17.64 by Aug. 28. The shares rally off here was rejected in the $21.50 region -- home to a 38.2% Fibonacci retracement of the security's third-quarter plunge, as well as its 320-day moving average -- which sparked Under Armour's most recent slide.

uaa stock daily price chart on sept 25

 

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