JNPR – Juniper Networks, Inc. – Shares of the maker of computer networking equipment are up 0.40% at $26.70 ahead of Juniper’s second-quarter earnings report slated for release after the closing bell this afternoon. JNPR was raised to ‘buy’ from ‘hold’ with an unchanged target share price of $35.00 at Canaccord on Monday. One cautious options strategist purchased a debit put spread in the August contract to hedge an earnings disappointment from the firm. The investor picked up 1,800 puts at the August $26 strike for an average premium of $1.03 each, and sold the same number of puts at the lower August $23 strike for an average premium of $0.26 apiece. The net cost of the bearish spread amounts to $0.77 per contract. Thus, the trader is positioned to make money if Juniper Networks’ shares decline 5.50% to breach the average breakeven point on the spread at $25.23 by August expiration. The investor walks away with maximum potential profits of $2.23 per contract if JNPR’s shares plunge 13.85% from the current price of $26.70 to trade below $23.00 by expiration day next month. The overall reading of options implied volatility on the stock is up 3.5% to arrive at 39.11% ahead of earnings after the close.
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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