- Tiffany and Co (trading $73.41 with an IV30 of 25.62 and an HV10 of 18.35) saw a bear 1×2 spread trade today. ?
- The stock (with an ADV of 6200 and an OI of 118,000) saw a customer buy 2,000 of the Oct28 (weekly) 72 puts paying $.98. ?Against this the customer sold 4,000 of the Oct 70 puts at $.44. ?Net the customer paid $.10 to buy 1 72 put and sell 2 of the 70 puts.
- This trade is likely set up as a hedge against a move lower in the underlying. ?The customer believes TIF might drop, but that it will not drop below $68.10 – which is where the 1 X 2 would stop making money and act like a short put. ?Thus the trader thinks there is near-term downside potential of 5-7%, but not exceeding 10%.
- This is mildly bearish the underlying and bearish volatility.
