Investors Pile Into STJ Put Options

STJ – St. Jude Medical, Inc. – Options investors are buying put options on the medical devices maker ahead of its second-quarter earnings report scheduled to be released ahead of the opening bell on Thursday. St. Jude’s shares are currently down 2.35% at $34.80 as of 11:50 am (ET). Traders hedging potential share price erosion that is likely to occur should STJ’s earnings disappoint the Street on Thursday purchased roughly 1,800 now in-the-money puts at the August $35 strike for an average premium of $1.25 per contract. Put players are positioned to make money as long as St. Jude Medical’s shares fall another 3.00% from the current price of $34.80 to breach the effective breakeven point to the downside at $33.75 by expiration day in August. The increase in investor demand for put options on the stock and impending earnings lifted STJ’s overall reading of options implied volatility 12.1% to 31.49% by 11:55 am (ET).

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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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