Traders Bulk Up on Weight Watchers Puts as Shares Tumble
Shares in weight management solutions provider Weight Watchers International, Inc. (Ticker: WTW) dropped 27% on Friday to a new four-year low of $22.35 after the company yesterday reported fourth-quarter earnings that missed analyst estimates and forecast earnings for fiscal 2014 below average analyst expectations.
The most traded options contracts by volume on Weight Watchers during the first 90 minutes of the session suggests some traders are positioning for the price of the underlying to continue lower in the near term. The Feb $20 strike puts are the most active on WTW as of the time of this writing, with upwards of 9,000 puts in play against open interest of 444 contracts. Time and sales data indicates most of the puts were purchased for an average premium of $0.40 each in the early going. Put buyers stand ready to profit at expiration next week in the event that shares in Weight Watchers decline another 14% from the current price of $22.91 to trade below the average breakeven point at $19.60. Shares in Weight Watchers last traded below $19.60 in April of 2009.
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