How one trader is hedging Conn's
Someone is apparently worried about another bad quarter the next time Conn's reports earnings next month.
optionMONSTER's Depth Charge monitoring program detected the purchase of 2,650 December 50 puts for $4.10, while equal amounts were sold in the December 50 puts for $1 and the December 70 calls for $1.57. Volume was more than twice the previous open interest at all three strikes, indicating that new positions were implemented.
The trader paid $1.53 and will collect $10 if CONN closes at $50 or lower on expiration. Earnings results come out on Dec. 5, so these options are probably being used to hedge a long position . The electronics retailer fell 12 percent after its last quarterly report on Sept. 5, with increased delinquencies hurting profit.
The trader must also sell shares for $70 if they go over that price, but he or she would probably be willing to do that because it's less than $1 above the all-time high. (See our Education section)
CONN fell 0.51 percent to $60.20 on Friday and has more than doubled in the last year. Total option volume was 5.5 times greater than average in the session, according to the Depth Charge.
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