MAT is seeing heavy put action today, as it reported earnings this morning before the market.? Traders have sold just above every put on the February board
Put Sales Bonanza in MAT
Mattel Inc. MAT, the maker of Barbie, currently up .17 to 27.07, is seeing heavy put action today, as it reported earnings this morning before the market.? Traders have sold just above every put on the February board from the 28?s down to the 26?s.? With the largest trading being a sale of 10,000 of the Feb 26 puts at .35.
This appears to be traders trying to take advantage of the lack of earnings movement out of MAT.? A trader is hoping to collect the .35 of premium if MAT stays above .26.? It is also possible the trader is willing to buy MAT for 25.65.
Traders looking to piggy back could do the MAT 26-27-28 iron fly collecting .85 which seems to have a favorable risk reward based on the copious amounts of put sales going on right now.
Hoping for a Slow Rally in KR
When Kroger, KR, was trading 69.20 earlier today with an IV30 of 19.90, a customer sold 6140 of the Mar 72.5 calls at .825 on splits.? In total about 8800 have traded on the day.? This appears to be another case of a long attempting to harvest premium from his or her long stock position.
The trader is hoping KR slowly rallies over the next few weeks toward 72.5 and is potentially willing to lose his or her long position above 73.35, which would be an all-time high in the name, which has been on quite the tear.
Traders looking to piggy back might consider buying the 70/72.5 call spread in March for .90 which seems to have a favorable risk reward.
Synthetic Short Straddle CVS
CVS Health, which has earnings on Feb 10, saw a synthetic short straddle trade.? The trader sold 20,000 of the May 100 calls at 3.25 and against that trade bought 1,000,000 shares of CVS for 99.20.? When converted to a standard straddle the customer is selling the May 100 straddle at 7.05.? Thus he or she is making a bet that CVS will stay between 93 and 107 between now and may expiration.
This is a straight volatility play and points toward the stock being quite neutral over the next few months and implied volatility diving in the name.
Traders looking to piggy back might consider a shorter dated iron butterfly in March 95/100/105 fly sold at 3.50 would have favorable risk reward and could pay nicely if earnings are a dud, as this synthetic straddle points toward.