Abbott Labs (ABT) Puts Active After Q4 Earnings

Shares in Abbott Laboratories (ABT) are in negative territory on Wednesday after the company reported better than expected fourth-quarter earnings, but revenue that was less than analysts estimated. Shares in the medical products company dropped 5.5% to an intraday low of $36.94 near the open, but have rallied significantly during the session to stand at $38.40 as of the time of this writing.

Options changing hands on Abbott Labs in the early going suggests some traders are positioning for the price of the underlying to potentially extend losses this week. The 24 Jan ’14 weekly puts traded more than 1,600 times this morning against open interest of 204 contracts. Time and sales data indicates most of the volume was purchased for an average premium of $0.45 each. Put buyers stand ready to profit at expiration this week in the event that ABT shares slip 2.2% from the current level of $38.40 to breach the breakeven point on the downside at $37.55.

The regular Mar $37 strike puts attracted fresh interest as well during the first half of the session, with around 440 contracts purchased at a premium of $0.74 each. These puts make money if shares move 5.5% lower to trade below $36.26 by March expiration. Put options are more active than calls on Abbott this morning, with the put/call ratio hovering near 1.4 just before midday in New York trading.

About Caitlin Duffy 373 Articles

Affiliation: Interactive Brokers

Caitlin Duffy joined Interactive Brokers in 2009. In her role as Equity Options Analyst, Caitlin provides daily market commentary; highlighting various options trades, trading patterns and strategies of interest. Through Interactive Broker's webinar program, Ms. Duffy presents a number of educational, options-related events describing the theoretical pricing of options, the option Greeks as well as options strategies.

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