Options Activity Update for Wednesday, June 09, 2010
I hope that your trading session is going well, as I know that members of S.O.M.E. are satisfied with their returns.
AK Steel Holding Corporation (AKS)
AK Steel Holding Corporation (AKS) sank to a new annual nadir of $12.48 this morning, extending its year-to-date losses of 40%.
Similarly, in the last 60 days, AKS has underperformed the broader S&P 500 Index (SPX) by over 40%. The stock now sits around $12.75, beneath multiple layers of trendline resistance.
As no surprise, put volume has spiked on AKS today, with some 5,200 of these bearishly oriented options changing hands -- well above the stock's usual put volume of fewer than 3,500 contracts.
The July 12 put has been most popular, with 1,625 contracts changing hands -- 94% at the ask price, suggesting they were bought. With just 486 contracts in open interest at this strike, it seems at least a portion of these puts were newly added. In other words, traders are expecting AKS' journey into the red to continue into July.
Elsewhere on the Street, short interest surged by 60.5% during the last month, and now accounts for a hefty 15.5% of AKS' total available float.
Analysts are skeptical as well. According to Zacks, of the 12 brokerage firms following AKS, nine rate the stock a "hold," compared to just three "buy" or better ratings.
Lululemon Athletica inc. (LULU)
Lululemon Athletica inc. (LULU) is set to take the earnings spotlight on Thursday morning, with analysts looking for first-quarter profits of 21 cents per share for the athletic apparel issue. Historically speaking, LULU has outperformed the consensus estimate in each of its last four quarterly reports.
In fact, LULU has outperformed the broader S&P 500 Index by 18.6% during the last 60 sessions. The stock has climbed nearly 30% in 2010, rocketing higher along the steadfast support of its 20-week and 32-week moving averages, and is currently perched around $39.62.
Option players swarmed LULU on Tuesday, rushing in to place their pre-earnings bets on the security. The July 35 put was most popular, with 1,169 contracts traded -- 94% at the bid price, suggesting they were sold. Open interest increased by 1,049 contracts overnight, to 1,356, revealing these out-of-the-money puts were newly added. By selling to open the July 35 put, bullish speculators are counting on LULU to remain above the $35 level over the next month.
However, analysts remain doubtful, with 10 of the 15 brokerage firms following LULU rating it a tepid "hold." Should LULU again report better-than-expected quarterly profits, some of these skeptics could change their outlook on the stock, sparking a fresh wave of buying pressure to propel the shares even higher.
SPECIAL DISCOUNTED MEMBERSHIP RATES UNTIL JUNE 30, 2010